The Kaighn Report

JERSEY BENEFITS ADVISORS INVESTOR NEWSLETTER WINTER 2012

2012-01-18T07:58:00.001-05:00

HAPPY NEW YEAR

MARKET WATCH

When planning a vacation most of us book a round trip fare because the goal is to start the vacation from one point, explore wonderful sights, exquisite beaches, historical landmarks, or other such treats, and return home exhausted. The round trip on the S&P 500* this year, while definitely exhausting, was not particularly satisfying when compared to any of the vacations above. Yet a round trip is exactly how you have to define the performance of the S&P 500* for 2011 when comparing the January open of 1,257.64 with the December close of 1257.60 for a statistically insignificant drop of .04 of a point, or essentially, a FLAT performance for the year!

The rare event of a flat performance for the S&P 500* did not occur without some dramatic point swings and gut wrenching volatility. In fact, the S&P 500* peaked at 1,363.61 on April 29th, and then bottomed out at 1,099.23 on October 3rd. This decline from peak to trough was 19.4% and very close to the 20% decline which defines a bear market. So, in retrospect, I guess we should be thankful for a flat performance.

The stock market this year has been affected by a litany of investor concerns which we have discussed before. Unemployment stuck near 9% for most of the year, global political unrest, natural disasters and the European sovereign debt crisis have been recurrent themes. Even as the news on the economic front continues to improve in the US, all of the other distractions, particularly the perceived dysfunction of government in the run up to the 2012 elections, weighs on market performance.

The good news is the government is performing as it was designed by our forefathers, when there is no clear majority which will support either the extreme left or right policies currently being put forth. Recently, George Will noted, “ Nothing that happens this November will bring an apocalypse. America had 43 presidencies before the current one and will have many more than that after the end of this one in 2013 or 2017. Decades hence, it will look like most others, a pebble in the river of American history”. At some point soon, we might even see some actual compromises taking place, such as reforming the tax code, reining in the deficit, and controlling the costs of entitlement programs, like Medicare, Medicaid and Social Security, so they remain viable for future generations.

Even though the S&P 500* was flat for the year, the Dow Jones Industrial Average (DJIA*) managed to eke out a 5.53% gain closing at 12,217.56 which is an increase of 640 points. On the other hand, the NASDAQ* was down 47.72 points and closed at 2,605.60 which is a 1.80% decline. So, 2011 ends as sort of mixed bag, but 2012 may have some real upside potential if the holiday spending translates into improved earnings.

As of this writing we are one week into 2012, and the DJIA* increased 1.17% from its 2011 close, the S&P 500* has added 1.61%, while the NASDAQ* gained 2.65%. Positive indices for the first week of trading generally bode well for annual performance. The Bureau of Labor & Statistics also released the December Employment Report which added 200,000 jobs to the economy and brought the unemployment rate down to 8.5%. While this report is very positive, there were 42,000 courier and messenger positions added during the month, which indicates at least some seasonal adjustment will occur in next month’s numbers. I think market volatility and economic improvement will continue in the US in 2012.

CHANGES FOR PARTICIPANTS IN VARIOUS RETIREMENT PLANS

There are some changes to the limit on the amount of elective deferrals that a plan participant can contribute to a traditional or safe harbor 401(k) plan, 403(b) plan, SARSEP or 457(b) plan. The limit is $16,500 for 2011, and it increases to $17,000 for 2012. Thereafter, cost of living adjustments will be made to the increase in the amount of elective deferrals. Catch up contributions, up to $5500, are allowed for 2011 & 2012.

The elective deferral limit for a SIMPLE IRA retirement plan is $11,500 for 2011 & 2012. Traditional IRA and ROTH IRA contributions are limited to $5,000 or $6,000 if the individual is 50 or older. If you have any questions, or wish to set up and/or contribute to a retirement plan, please don’t hesitate to contact me.

ENERGY PRODUCTION HEADS TO MORE STABLE LOCALES

During the 4th quarter of 2011, the United States became a net exporter of energy, something which hasn’t happened in several decades. Without much fanfare, or support from the government, Big Oil has been redrawing the energy map. Rather than searching for oil and other fuels in the Persian Gulf, the desert sands of North Africa, the Niger Delta and the Caspian Sea, there has been a shift towards less exotic locales, as Western energy companies increasingly search for supplies in more stable and economically viable countries.

The oil sands of Canada, as well as deep water oil off the coasts of Brazil and the US, shale oil in the continental US, and shale gas deposits in the US and Europe are becoming technologically and economically more attractive than energy deposits in countries such as Venezuela and Russia, where the threat of nationalization is more likely. This new way of looking at risk is fundamentally reshaping the way international oil companies are doing business. They can either invest in oil that is easy to produce, but runs the risk of political interference, or they can produce oil and gas in countries which are stable, but have deposits which are more difficult to extract. The latter seems to be the choice most companies are making at the present time.

The technological advances making this seismic change possible are called horizontal drilling and hydraulic fracturing, or fracking, as it is commonly called. Many communities in the Midwest and Eastern regions of the US are now debating the economic and environmental implications of production in areas such as the Marcellus & Devonian Shales. While the debate rages, many land owners are realizing the economic benefit of owning mineral rights beneath their property.

North Dakota is one of the newest oil hot spots in the United States. Along with parts of Montana, Saskatchewan, and Manitoba, North Dakota is home to the largest accumulation of oil in North America. This oil deposit is bigger than Louisiana, Texas, California, and Alaska's Arctic National Wildlife Refuge, and it is called the Bakken Formation. While much of the country is suffering from close to 9% unemployment, this region can’t seem to fill oil production jobs fast enough.

Meanwhile, President Barack Obama and Congress are starting the election year locked in a tussle over a proposed 1,700-mile oil pipeline from Canada to Texas that will force the White House to make a politically risky choice between two key Democratic constituencies, unions and environmentalists. The fate of the Keystone Pipeline XL must be decided by February, as part of the agreement extending the payroll tax cut. This should be a very interesting election year.

* THE S&P 500, THE DJIA AND THE NASDAQ ARE UNMANAGED INDEXES THAT ARE WIDELY USED AS INDICATORS OF MARKET TRENDS. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE OF THESE INDEXES DOES NOT REFLECT FEES AND CHARGES ASSOCIATED WITH INVESTING. IT IS NOT POSSIBLE TO INVEST DIRECTLY IN AN INDEX.

DOLLAR COST AVERAGING THROUGH A SYSTEMATIC SAVINGS PLAN IS AN EXCELLENT WAY TO BUILD AN ACCOUNT WITHOUT A SIZEABLE INITIAL INVESTMENT. SAVING A PORTION OF OUR PAY EACH MONTH IS VERY IMPORTANT. COMPANY SPONSORED PENSION PLANS ARE ONE METHOD TO SAVE AND SHOULD BE USED FOR RETIREMENT. OTHER SYSTEMATIC INVESTMENT ACCOUNTS, SUCH AS ROTH IRA’S, TRADITIONAL IRA’S, COVERDELL ACCOUNTS, 529 PLANS, BROKERAGE ACCOUNTS AND ANNUITIES CAN ALSO BE OPENED, AND DEBITED DIRECTLY FROM YOUR CHECKING OR SAVINGS ACCOUNT. FOR MORE INFORMATION, JUST CALL TO SET UP AN APPOINTMENT. REFERRALS ARE ALWAYS WELCOME.

JOHN H. KAIGHN

COMPANY INFORMATION:

Investment Advisory Services offered through:
Jersey Benefits Advisors
P.O. Box 1406
Ocean City, N.J. 08226
Phone: 609 827 0194
Fax: 609 861 9257
Email: kaighn@jerseybenefits.com
Http://www.jerseybenefits.com

Securities offered through:
Transamerica Financial Advisors, Inc.
A registered Broker/Dealer
570 Carillon Parkway
St. Petersburg, FL 33758-9053
800-245-8250
Member FINRA & SIPC
Transamerica Financial Advisors, Inc. is
not affiliated with Jersey Benefits Advi-
sors.

Third Party Administration and Insurance
Services offered through:
Jersey Benefits Group, Inc
P.O. Box 1406
Ocean City, N.J. 08226
Phone: 609 827 0194
Fax: 609 861 9257
Email: kaighn@jerseybenefits.com
Http://www.jerseybenefits.com/

All opinions expressed in this newsletter are
solely those of John Kaighn & Jersey Benefits Advisors.

LD 42655 - 01/12

What Clients can Learn from the Four Worst Market Calls Ever

2011-12-01T07:42:00.000-05:00

I came across this article and thought it was in line with my way of thinking in regard to people who hold themselves out to be market gurus. However foolish it may be, there are always those who like to believe they really are above being laid low by changes in the market they didn't anticipate. For those of us with a bit more humility, these examples tend to vindicate our judgement, even though they had terrible consequences for the media proclaimed gurus and their followers.

This article was written by Dan Richards for Advisor Perspectives on November 15, 2011.

Bad investment advice can come from many sources, but perhaps none has been worse than what was offered by four experts whose media profile exceeded their investment acumen: Irving Fisher, Joe Granville, Robert Prechter and Henry Blodget.

Here’s some historical context and practical advice to help clients avoid the trap of listening to the gurus who dominate newspaper headlines.

Four sad stories

In the 1920’s, Yale’s Irving Fisher was a household name in America and by far its best known economist; his pronouncements regularly made front-page headlines. Three days before the crash of 1929, he famously announced that “stock prices have reached what appears to be a permanently high plateau” – and for months after the crash, maintained that a recovery in stock prices was imminent.

In 1980 and 1981, Joe Granville’s investment seminars drew packed audiences and his predictions caused major one-day moves in the market. He even predicted that he would win the Nobel Prize in economics and on one occasion literally walked on water, as he made his entrance strolling across a swimming pool that he’d had filled with concrete.

But according to Hulbert Report that tracks the performance of investment newsletters, from 1980 to 2005 The Granville Letter was dead last among American newsletters, with investors who followed its advice losing 95% of their capital.

In 1987, Elliott Wave proponent Robert Prechter told clients to sell in advance of “Black Monday.” He’s been dining out on that call ever since, in the process told his readers to stay on the sidelines throughout the record bull market of the 1990s.

And in 2000, Merrill Lynch tech guru Henry Blodget predicted that tech valuations would continue to climb – and backed up his words by putting his personal net worth on the line, most of which quickly evaporated.

The media’s agenda is different from yours

Last summer, the New York Times examined why the media consistently provides a platform to financial gurus with extreme, often simplistic (and sometimes simple-minded) views.

The answer was simple – middle of the road, consensus thinking is boring; it’s much more interesting to have a guest with provocative, unconventional opinions. That’s led to a body of “they never saw a mike they didn’t love” experts in the field of politics and investing, opining on events of the day. Sometimes called media hounds or the less complimentary media whores, these experts can be omnipresent.

Very few of these media gurus manage meaningful amounts of money; often their biggest asset is their reputation. But that doesn’t prevent clients who watch their interviews from getting worked up and potentially deflected from their plan.

So if we recognize that most of these experts’ impact on clients is neutral at best and can in fact do significant damage, the question is what to do about it.

Bringing facts and reason into play

Just telling clients to ignore these gurus won’t typically work – the very fact that they are given a media platform, deserved or not, gives them credibility.

That’s why I was struck by the reasoned, fact-based approach to this topic in a video by industry veteran and Columbia professor Michael Mauboussin. A repeat winner of Institutional Investor’s All-America research team, he has served as chief US investment strategist at Credit Suisse First Boston and is currently chief investment strategist for Legg Mason Capital Management

Mauboussin points to research proving that expert predictions do not beat the market, and that there is even a negative correlation between media profile and accuracy – the higher an expert’s media profile, the worse they do.

This video lasts three minutes. For those looking for a more in-depth perspective, here is a 30-minute interview with Mauboussin.

You could share these videos with clients who ask about views they’ve seen on television – or strike a pre-emptive blow by sending the links to all your clients. While you can’t control what your clients see on television, you can try to influence how they’ll respond.

--------------------------------------------------------------------------------

Dan Richards is a top-rated presenter at advisor conferences and an award winning instructor in the MBA program at the University of Toronto, as well as author of Getting Clients Keeping Clients: The Essential Guide for Tomorrow’s Financial Advisor. To learn more about his conference keynotes and workshops, email dan@clientinsights.ca.

The Desolate Wilderness and This Fair Land

2011-11-20T09:10:00.005-05:00

I usually write the bulk of the material that appears on my blog, but every now and then I feature other authors who have a flair for great writing. This is a piece that is an annual ritual in a national publication that corresponds with the Thanksgiving Holiday season. It does a nice job of reminding the reader of the reasons to be thankful and to whom we owe that gratitude. I hope you enjoy it

The Desolate Wilderness

Here beginneth the chronicle of those memorable circumstances of the year 1620,as recorded by Nathaniel Morton, keeper of the records of Plymouth Colony, based on the account of William Bradford, sometime governor thereof:

So they left that goodly and pleasant city of Leyden, which had been their resting place for above eleven years, but they knew that they were pilgrims and strangers here below, and looked not much on these things, but lifted up their eyes to Heaven, their dearest country, where God hath prepared for them a city (Heb. XI, 16, and therein quieted their spirits. When they came to Delfs-Haven they found the ship and all things ready, and such of their friends as could not come with them followed after them, and sundry came from Amsterdam to see them shipt, and to take their leaves of them. One night was spent with little sleep with' the most, but with friendly entertainment and Christian discourse, and other real expressions of true Christian love.

The next day they went on board, and their friends with them, where truly doleful was the sight of that sad and mournful parting, to hear what sighs and sobs and prayers did sound amongst them; what tears did gush from every eye, and pithy speeches pierced each other's heart, that sundry of the Dutch strangers that stood on the Key as spectators could not refrain from tears. But the tide (which stays for no man) calling them away, that were thus loath to depart, their Reverend Pastor, falling down on his knees, and they all with him, with watery cheeks commended them with the most fervent prayers unto the Lord and His blessing; and then with mutual embraces and many tearsthey took their I leaves one of another, which proved to be the last leave to many of them.

Being now passed the vast ocean, and a sea of troubles before them in expectations, they had now no friends to welcome, them, no inns to entertain or refresh them, no houses, or much less towns, to repair unto tb seek for succour; and for the season it was winter, and they that know the winters of the country know them to be sharp and violent, subject to cruel and fierce storms, dangerous to travel to known places, much more to search unknown coasts. Besides, what could they see but a hideous and desolate wilderness, full of wilde beasts and wilde men? and what multitudes of them there were, they then knew not: for which way soever they turned their eyes (save upward to Heaven) they could have but little solace or content in respect of any outward object; for summer being ended, all things stand in appearance with a weatherbeaten face, and the whole country, full of woods and thickets, represented a wild and savage hew. If they looked behind them, there was a mighty ocean which they had passed, and was now as a main bar or gulph to separate them from all the civil parts of the world.

This Fair Land

Anyone whose labors take him into the far reaches of the country, as ours lately have done, is bound to mark how the years have made the land grow fruitful. This is indeed a big country, a rich country, in a way no array of figures can measure and so in a way past belief of those who have not seen it. Even those who journey through its Northeastern complex, into the Southern lands, across the central plains and to its Western slopes can only glimpse a measure of the bounty of America.

And a traveler cannot but be struck on his journey by the thought that this country, one day, can be even greater. America, though many know it not, is one of the great underdeveloped countries of the world; what it reaches for exceeds by far what it has grasped.

So the visitor returns thankful for much of what he has seen, and, in spite of everything, an optimist about what his country might be. Yet the visitor, if he is to make an honest report, must also note the air of unease that
hangs everywhere.

For the traveler, as travelers have been always, is as much questioned as questioning. And for all the abundance he sees, he finds the questions put to him ask where men may repair for succor from the troubles that beset them.

His countrymen cannot forget the savage face of war. Too often they have been asked to fight in strange and distant places, for no clear purpose they could see and for no accomplishment they can measure. Their spirits are not quieted by the thought that the good and pleasant bounty' that surrounds them can be destroyed in an instant by a single bomb. Yet they find no escape, for their survival and comfort now depend on unpredictable strangers in far off corners of the globe.

How can they turn from melancholy when at home they see young arrayed against old, black against white, neighbor against neighbor, so that they stand in peril of social discord. Or not despair when they see that the cities and countryside are in need of repair, yet find themselves threatened by scarcities of the resources that sustain their way of life. Or when, in the face of these challenges, they turn for leadership to men in high places-only to find those men as frail as any others.

So sometimes the traveler is asked whence will come their succor. What is to preserve their abundance, or even their civility? How can they pass on to their children a nation as strong and free as the one they inherited from their forefathers? How is their country to endure these cruel storms that beset it from without and from within?

Of course the stranger cannot quiet their spirits. For it is true that everywhere men turn their eyes today much of the world has a truly wild and savage hue. No man, if he be truthful, can say that the specter of war is banished. Nor can he say that when men or communities are put upon their own resources they are sure of solace; nor be sure that men of diverse kinds and diverse views can live peaceably together in a time of troubles.

But we can all remind ourselves that the richness of this country was not born in the resources of the earth, though they be plentiful, but in the men that took its measure. For that reminder is everywhere in the cities, towns, farms, roads,
factories, homes, hospitals, schools that spread everywhere over that wilderness.

We can remind ourselves that for all our social discord we yet remain the longest enduring society of free men governing themselves without benefit of kings or dictators. Being so, we are the marvel and the mystery of the world, for that enduring liberty is no less a blessing than the abundance of the earth.

And we might remind ourselves also, that if those men setting out from Delftshaven had been daunted by the troubles they saw around them, then we could not this autumn be thankful for a fair land.

These editorials have appeared annually in the Wall Street Journal since 1961.

HAPPY THANKSGIVING

John H. Kaighn

Jersey Benefits Advisors

JERSEY BENEFITS ADVISORS INVESTOR NEWSLETTER FALL 2011

2011-10-13T08:41:00.003-04:00

MARKET WATCH

At the risk of sounding like a broken record, when you look back at market performance for the third quarter, you can’t help but realize the litany of investor concerns were quite similar to the worries of the first two quarters of 2011. Unemployment stuck at 9.1%, global unrest, natural disasters and the European sovereign debt crisis, especially in Greece, seemed to be the recurrent themes causing investor angst. Unfortunately, the market indices were unable to mount the end of quarter surge that provided some relief during the first two quarters, and the market indices took a tumble in the third quarter, leaving them teetering near bear market territory.

Of course, Congress did not disappoint with their political partisanship exhibited during the August debt limit debacle. Their inability to develop a credible solution to the country’s fiscal situation, and the President’s inability to propose anything other than tax increases on the “so called rich” and more spending led to a downgrade by S&P on US debt. Of course, S&P may have had just a slight reason to play gotcha, since their ratings of mortgage backed securities and collateralized debt obligations during the housing boom have been called into question by Congress and the President.

It looks like we might be stuck in this current range for the markets until the 2012 elections are over unless the super committee, which was born out of the debt limit crisis, can come up with some recommendations for trimming the deficit and getting our fiscal house in order. If they don’t, $1.2 trillion across the board spending cuts will be implemented. The clock is ticking, as their deadline is November 23.

It gets extremely frustrating when you listen to the rhetoric of our leaders and realize their utter cluelessness at how their inability to compromise affects the markets. They talk about helping main street, yet they fail to realize the markets contain the retirement assets of most of the citizens of this fair land. In his testimony before Congress’s Joint Economic Committee, Ben Bernanke, Chairman of the Federal Reserve, stated, ”Political brinksmanship over the debt ceiling is no way to run a railroad”. Too bad Congress doesn’t get it, regarding the effect of their inaction on market sentiment.

The Dow Jones Industrial Average* closed the quarter at 10,913.38 down 12% for the quarter and a –5.74% return for the year. The S&P 500* ended the quarter at 1,131.42 a –10.04% year to date return and off 14% for the quarter. Meanwhile, the NASDAQ* finished the quarter at 2,415.40 having fallen 13% for the quarter and –8.95% for the year. As uninspiring as these results are, the market indices have not crossed into bear market territory as we go to print on 10/6/2011. Even though there have been some harrowing events in October, the crashes of 1929 and 1987 come readily to mind, Jeff Hirsch, editor in chief of Wiley’s Stock Trader’s Almanac states, “Going back to 1950, September has had a greater average loss than October”. Furthermore, according to research by Bank of America Merrill Lynch, since 1964 there have been 15 quarters in which the S&P 500 lost 10% or more. After12 of those 15 quarters, the subsequent quarter saw an average rally of 10%. Let’s hope the odds are in our favor going forward, and that there are some adults in the room during the super committee’s debate on deficit reduction.

If you have any questions or concerns, please don’t hesitate to contact me.

ARE WE HEADING FOR THE DREADED DOUBLE DIP?

Most economists are not predicting a “double dip recession”, but it is a topic currently being discussed. I have heard odds of anywhere between a 20% chance of it happening, to the point where some people are saying we are already in recession again. If you remember in the past, we discussed an inverted yield curve as a recessionary indicator. At the current time the Fed is attempting to lower long term interest rates and flatten the yield curve, since it now has a positive slope.

While it is possible for the economy to slip into recession with a positive yield curve, I don’t think we will see a double dip. Businesses will be reporting their earnings in the next few weeks, and it will be positive for the markets. There is just too much doom and gloom, so I’m a contrarian on the double dip.

A Familiar Chart?
Dot Com Bust!
Housing Bust!
Gold?

OPERATION TWIST & NEW ADDITION TO OUR WEBSITE

OPERATION TWIST

At the September FOMC meeting the Federal Reserved stated the economy was facing headwinds and interest rates would remain low. They also announced Operation Twist, one of the tools at the Feds disposal to put pressure on long term interest rates. This tool was last used in the 1960’s and gets its name from Chubby Checker’s hit of that era, The Twist. Basically, the Fed will be selling short term bonds from the Treasury and replacing them with longer term bonds with maturities between 25 and 30 years.

The Fed will be competing with individual and sovereign bond buyers, so the objective is to increase the price of longer term bonds, which in turn lowers the yield. Besides lowering long term interest rates, the Fed is also hoping investors will move their assets into higher risk investments. Recently, investors have been fleeing riskier investments for the perceived safety of Treasuries. They have been willing to park their money in an investment with no return, in order to prevent losses. This creates risk too, because bonds purchased at a premium can fall in price and produce a loss.

ONLINE LIFE INSURANCE

We have partnered with ORG, Inc. to develop and market an online life insurance quotation system that allows individuals to enter their information and receive competitive quotes from major insurance carriers online. In most cases the application can also be completed online. There is also a direct toll free line to speak to a customer service representative, as well as an email link to ask questions or receive assistance with the quotation or application process. The quotes can be obtained from our Jersey Benefits Group, Inc. Website, or the Jersey Benefits Life Insurance Website. For people who wish to complete the process of applying for life insurance totally on their own, and like to evaluate numerous quotes independently before applying, this site should satisfy their needs. Quotes are free and no money is exchanged until the individual is approved for the policy quoted.

Of course, anyone who is interested in talking to an insurance advisor, who will meet with them in the traditional face to face manner, simply needs to contact the company either by telephone or email to set up an appointment. Through the ORG network, we can assist individuals outside the state of NJ to locate insurance professionals who can meet with them face to face. The toll free number to call, outside NJ, is (855) 802-4123 and the email address for those outside NJ is jersey.benefits@life4org.com. Anyone in the state of New Jersey can contact me directly for their insurance needs at (609) 827-0194 or by email Kaighn@JerseyBenefits.com.

* THE S&P 500, THE DJIA AND THE NASDAQ ARE UNMANAGED INDEXES THAT ARE WIDELY USED AS INDICATORS OF MARKET TRENDS. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE OF THESE INDEXES DOES NOT REFLECT FEES AND CHARGES ASSOCIATED WITH INVESTING. IT IS NOT POSSIBLE TO INVEST DIRECTLY IN AN INDEX.

DOLLAR COST AVERAGING THROUGH A SYSTEMATIC SAVINGS PLAN IS AN EXCELLENT WAY TO BUILD AN ACCOUNT WITHOUT A SIZEABLE INITIAL INVESTMENT. SAVING A PORTION OF OUR PAY EACH MONTH IS VERY IMPORTANT. COMPANY SPONSORED PENSION PLANS ARE ONE METHOD TO SAVE AND SHOULD BE USED FOR RETIREMENT. OTHER SYSTEMATIC INVESTMENT ACCOUNTS, SUCH AS ROTH IRA’S, TRADITIONAL IRA’S, COVERDELL ACCOUNTS, 529 PLANS, BROKERAGE ACCOUNTS AND ANNUITIES CAN ALSO BE OPENED, AND DEBITED DIRECTLY FROM YOUR CHECKING OR SAVINGS ACCOUNT. FOR MORE INFORMATION, JUST CALL TO SET UP AN APPOINTMENT. REFERRALS ARE ALWAYS WELCOME.

COMPANY INFORMATION:

Investment Advisory Services offered through:
Jersey Benefits Advisors
P.O. Box 1406
Ocean City, N.J. 08226
Phone: 609 827 0194
Fax: 609 861 9257
Email: kaighn@jerseybenefits.com
Http://www.jerseybenefits.com

Securities offered through:
Transamerica Financial Advisors, Inc.
A registered Broker/Dealer
570 Carillon Parkway
St. Petersburg, FL 33758-9053
800-245-8250
Member FINRA & SIPC
Transamerica Financial Advisors, Inc. is
not affiliated with Jersey Benefits Advi-
sors.

Third Party Administration and Insurance
Services offered through:
Jersey Benefits Group, Inc
P.O. Box 1406
Ocean City, N.J. 08226
Phone: 609 827 0194
Fax: 609 861 9257
Email: kaighn@jerseybenefits.com
Http://www.jerseybenefits.com/

All opinions expressed in this newsletter are
solely those of John Kaighn & Jersey Benefits Advisors.

LD41861 - 10/11

The Monday Morning Quarterback Is Alive and Well

2011-09-26T09:13:00.002-04:00

Trying to get a handle on the deluge of information constantly bombarding investors on a daily basis is a daunting task, to say the least. This morning I had the distinct pleasure of hearing a sports reporter, who was reporting on Michael Vicks' broken hand, launch into a dissertation about how sports serve as a distraction for the "disasterous state of our economy, the horrendous jobs situation and polarized politics". Well, no duh! However, is it appropriate for a sport's announcer to utilize negative and potentially inflammatory language about the economy on a Monday morning?

Anyway, as the campaign season heats up in earnest, Obama is already stumping for the 2012 election, while the Republicans continue to try to convince voters to get behind an "electable candidate". The two front runners have written books recently, both of which have remarks towards Social Security which can be utilized by the Democrats to sway voters. Meanwhile, the economy and employment, issues which we are told are priorities of both parties, will not see any significant legislative action for the foreseable future. The reasons being the Democrats hope to paint the Republicans as standing in the way of job growth, by not adopting Obama's new "jobs program", and the Republicans hope to convince voters the blame belongs to Obama for 9% unemployment from "failed stimulus plans" and trillion dollar deficits. Of course, there is the possibility that a lack of any government fiscal intervention might actually allow the economy to limp along and begin to repair itself.

Thanks to a swift and effective move by the Swiss to intervene in their currency when traders were moving to the Franc as a safe haven due to the rout of the Euro, the dollar has strengthened significantly. Gold, silver and other commodities have taken it on the chin as the dollar has once again become a safe haven for investors worried about worldwide demand slowing. Many emerging markets are in bear market territory as the week begins, and economists are all over the place in handicapping a new recession, or "double dip". Hopefully, the Eurozone will strengthen their political union enough to agree to sell bonds, which will backstop Greece and the rest of the PIIGS.

On the home front, I can't help but ask when we will finally unleash a credible energy plan utilizing natural gas, uranium and coal to put people back to work. We've seen the result of the government trying to pick technologies, as evidenced by Solyndra debacle and it doesn't work. I am not saying abolish the EPA, but I am saying we might be able to postpone some of the drastic steps we need to take to "save the planet" until our economy is functioning better and our energy sources are not quite as precarious. While we are at it, we could also evaluate if our response to 9/11, while a complete and utter success, might not have given al Qaeda more credit as a threat to the US than they actually turned out to be. Balance is what we need going forward.

John H. Kaighn

Jersey Benefits Advisors

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2011-09-20T07:57:00.000-04:00

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Best regards,

John H. Kaighn

(609) 827-0194

Jersey Benefits Advisors

1. EverBank promises to keep the yield on your account in the top 5% of competitive accounts as measured the last Wednesday of each month in Bankrate Monitor, a weekly national survey of large banks and thrifts, surveyed by Bankrate.com. For the Yield Pledge CD, EverBank promises to keep the yield on your account in the top 5% of competitive accounts
as measured each week in Bankrate Monitor. This promise applies at the time of purchase, or when rolling your expiring CD into a new CD with EverBank.
EverBank’s relationship with the Financial Institution employing your Investment Professional is through a joint marketing agreement for the sale of banking products only. Otherwise, there is no affiliation.
© 2011 EverBank. All rights reserved. 11EAP0092.1
EverBank is an Equal Housing Lender, Member FDIC.

August: The Quiet Month?

2011-08-30T09:49:00.002-04:00

Needless to say, it has been an eventful end of August on the East Coast, with an earthquake, hurricane and tornado warnings. Hurricane Irene came and went and left Cape May County pretty much intact, minus a few cubic yards of beach sand and some toppled trees. I know there was quite a bit of grumbling about the mandatory evacuation being overkill, and I thought that myself at first, but had the eye of the storm been out to sea a bit more or gone up the Delaware Bay, I think I would have been chest high or worse in water in my living room. Had people stayed, and the worst case scenario happened, there might have been some serious injury, especially in the ranks of the tourists who swell our population exponentially at this time of year. You just have to look north and west for evidence.

Having worked in a school system for a major portion of my life, I equate the purpose and intent of the evacuation with a fire drill. This was the opportunity for the governor and emergency management officials to err on the side of caution and see if the evacuation plans for removing approximately one million people from Cape May County would work. I have to say it did work quite well, even though I know quite a few of the locals, myself included, did remain and the Bull and Bear Tavern was quite packed Friday night. It helped to know I live on just about the highest ground in the county and the area shelter was literally right around the corner!

Speaking of bulls and bears, the month of August, traditionally a time for vacation, has been full of activity and debate. A 17.9% drop in the S&P 500 took us well beyond a correction and very close to bear market territory. However, there has been a rebound off the low of 1,119.46 to 1,210.08 as we prepare for the Labor Day weekend. The aforementioned natural calamities also added to the show. Of course, the politicians exhibited their expertise by taking the debt ceiling debate down to the wire and generating a debt downgrade. Now the Fed, which just ended its meeting in Jackson Hole, announced it effectively can't do much more with monetary policy and that fiscal policy is the solution to our ills. That leaves things to the "Super Committee" born out of the debt ceiling debate. It looks to be an interesting September.

AFTER THE DOWNGRADE

2011-08-10T12:22:00.000-04:00

Unimpressed with U.S. deficit reduction plans, S&P delivers on its warning.

Presented by John H. Kaighn

Unprecedented and unsettling. Standard & Poor’s issued a historic downgrade of U.S. debt on August 5, sensibly waiting until the market week had concluded to send a shock wave toward global investors. It reduced America’s long-term debt rating – which had been AAA since 1941 – to AA+(1)

S&P felt Congress did too little too late. The credit rating agency had threatened to lower the boom if Congress passed any deficit reduction plan smaller than $4 trillion in scope. The Budget Control Act of 2011 “falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics,” an S&P statement noted. It also retained its “negative” credit outlook on the U.S. (2)

S&P is also skeptical that the federal government can collect more money from taxpayers. Its analysts do not think the Bush-era tax cuts will sunset at the end of 2012 “because the majority of Republicans in Congress continue to resist any measure that would raise revenues.” (2)

On August 5, S&P sovereign ratings committee chair John Chambers told Fox News that the new AA+ rating could be cut to AA within 6-24 months if the U.S. doesn’t arrange to slash $4 trillion from its deficit in the next decade. The implication: Congress better agree on more cuts by February. (3)

China’s comments. The world’s largest holder of U.S. debt issued a withering critique of Congress through Xinhua, its official news agency. The state commentary stressed that the U.S. has a “debt addiction” only curable via major cuts to defense spending and entitlement programs. It also said that the option of a “new, stable and secured global reserve currency” should be explored. (4)

The Treasury’s claim. Friday evening, the Treasury argued that S&P’s analysis contained an accounting error that unnecessarily added $2 trillion to its projection of U.S. debt. S&P admitted the error but stuck with the downgrade. (1)

So what happens now? The early August global response aside, analysts are divided as to what the short-term impact might be for the American economy. Could it cripple the recovery, or just prove inconvenient to it?

Demand was big for Treasury notes even before the threatened downgrade and Treasuries still symbolize comparative safety to institutional investors, so an August selloff might be short-lived. If this turns out to be the case, the effect on interest rates might be less significant than feared.

In the opinion of JP Morgan Chase analysts, Treasury yields could increase by 60-70 basis points as a result of the downgrade, translating to $100 billion in added annual borrowing costs for America. Citing Federal Reserve research, these analysts think that an increase of 50 basis points in Treasury yields (0.5%) could take a 0.4% bite out of U.S. GDP. (2)

Could the Fed launch QE3*? The possibility exists, particularly if foreign investors ditch dollar assets. The Fed’s Open Market Committee will make an announcement on August 9, and few analysts expect another wave of bond buying – but it is an option.

When might the U.S. recapture its AAA rating? It might take years for that to happen. S&P has cited political gridlock on Capitol Hill as a major reason for the downgrade, and it doesn’t see that going away in upcoming months. On top of that, the U.S. economy expanded just 1.3% in the first half of 2011 - about half the pace needed to dispel the lingering effects of recession. (5)

Are mortgage rates going to go north? Maybe; maybe not. Rates on conventional mortgages have a direct relationship with 10-year Treasury yields. Recently, those yields have dramatically fallen, and demand for longer-term Treasury notes has been palpable. Interest rates on auto loans might see a spike, as those rates are pegged to 2-year notes and factors like the LIBOR rate. The hardest hit might come from credit card issuers. Credit card interest rates reflect the prime rate. Credit.com credit card advisor Beverly Blair Harzog told CNNMoney that she believed credit card firms could possibly jack up rates 1-5% as a result of jitters over the downgrade. (6)

Wall Street might sail through this. Does that sound far-fetched? Look at some historical examples. S&P downgraded Canada’s AAA credit rating in the spring of 1993, yet Canadian stocks gained 15% in 1994 and our northern neighbor had its AAA rating back by 1997. Moody’s Investors Service downgraded Japan in November 1998 and its stock market advanced more than 25% in the next 12 months. Italy, Canada, Ireland, Japan, Belgium and Spain have all suffered S&P downgrades from AAA, and most of these cuts had little sustained impact on government bond yields. (6,7)

What’s your outlook? You might be considering some major moves in the wake of the S&P decision. Remember that impulsive decisions are often regretted down the line. Confer with the financial professional you trust to determine what you may (and may not) want to do.

John H. Kaighn may be reached at (609) 827-0194 or kaighn@jerseybenefits.com.

Jersey Benefits Group, Inc.

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty.

* Quantitative Easing [round] 3
LD41171-08/11

Citations.
1 - nytimes.com/2011/08/06/business/us-debt-downgraded-by-sp.html [8/5/11]2 - bloomberg.com/news/2011-08-06/u-s-credit-rating-cut-by-s-p-for-first-time-on-deficit-reduction-accord.html [8/5/11]
3 - foxbusiness.com/markets/2011/08/06/sp-us-faces-further-downgrade-beyond-double/ [8/6/11]
4 - nytimes.com/reuters/2011/08/06/world/asia/news-us-china-sp.htm [8/6/11]
5 - huffingtonpost.com/2011/07/29/gdp-us-q2-second-quarter-expectations_n_913032.html [7/29/11]
6 - money.cnn.com/2011/08/06/pf/sp_rating_money.moneymag/ [8/6/11]
7 - marketwatch.com/story/china-rips-us-on-debt-rating-downgrade-2011-08-06 [8/6/11]
8 - montoyaregistry.com/Financial-Market.aspx?financial-market=an-introduction-to-the-stock-market&category=29 [8/6/11]

JERSEY BENEFITS ADVISORS INVESTOR NEWSLETTER SUMMER 2011

2011-07-07T08:32:00.010-04:00

MARKET WATCH

We have just completed halftime in America, to borrow a sports analogy, as the residents of this fair land took a much needed respite, to reflect on their revered and fragile independence. Judging from the traffic here at the Jersey Shore, at least a few souls didn’t seem to mind parting with the $3.49 per gallon it took to reach the sizzling sand and take a dip in the unseasonably warm 4th of July ocean. Then, it was back to work, for the 9 out of 10 who officially had a job, as the second half of the year began, hopefully without some of the shocks we experienced in the first half, but realizing it could very well be more of the same.

Actually, the first half ended very much like the first quarter as the news generally was focused on the same regions of the world. The US economy seemed to be on the verge of a boom, only to get mired down in international events which captured the media’s attention as the market rebounded from a 7% decline, just days before the quarter’s close, to make a fantastic comeback and post quite respectable results. The Middle East and North African uprisings raged on but were stalemated, European debt problems seemed to flare up and cool off every other week, with constant threats of a Greek default. Japan has put on its game face and set out to rebuild a tsunami battered economy, while so many seem just so enamored with “everything China”. It reminds me of the 70’s mindset towards the Soviet model. For those of you who weren’t around then or don’t remember the history, suffice it to say, there is no Soviet Union now!

One major bright spot during the second quarter was the Navy Seals’ killing of bin Laden. Unfortunately, the initial euphoria was met with the stark realization his al Qaeda buddies might want revenge. While things have been quiet, the destabilizing unease due to the threat of terrorism dampens our collective consciousness. Still, it does bring us one step closer to closing a chapter which has been consuming a large part of our treasure and dividing us as a people.

The major indices were all up for the year at the halfway point, thanks to the surge during the last four trading days in June. The Dow Jones Industrial Average* closed at 12,414.34 which is a 7.2% return for the year, so far. The S&P 500*, a measure of the broader market, closed at 1,320.64 which was 5 points lower than its close for the first quarter, but still a 5% return thus far for 2011. Finally, the NASDAQ*, the bell weather of technology, finished the first half at 2,781.07, 8 points lower than the first quarter, but still a 4.5% return for the year. Considering the headwinds the market faced during the first half of the year, and after two nearly 7% corrections, a positive return was a lot like a small lead at halftime; it felt good, but you don’t want to get complacent, because the game could take many twists and turns before time expires.

Speaking of twists and turns, all of the fuss about the debt limit needs a bit of clarification, as the August deadline looms. Look for a last minute compromise that raises some taxes and makes some budget cuts, possibly even to Medicare and Social Security. To play chicken with the debt ceiling, which in effect is gambling with the credibility of the government to make its interest payments, would be as devastating to the markets as when Congress failed to initially approve the TARP legislation. It would be nice for politicians to stop all of the rhetoric and talk plainly about the need to live within a budget like you & I must do.

HAPPY 4TH OF JULY From the Jersey Shore!

PRIVACY POLICY & NEW ADDITION TO OUR WEBSITE

PRIVACY POLICY

At Jersey Benefits Advisors and Jersey Benefits Group, Inc. protecting your privacy is very important to us. We want you to understand what information we collect and how we use it. We collect and use information from you on applications and other forms as well as information about financial transactions with us and from non-affiliated third parties. This “nonpublic personal information” is obtained in connection with providing a financial product or service to you.

We do not disclose any nonpublic personal information about you without your express consent, except as permitted by law. We may disclose the nonpublic personal information we collect to persons or companies that perform services on our behalf.

We restrict access to your nonpublic personal information and only allow disclosures to persons and companies as permitted by law to assist in providing products or services to you.
We maintain physical, electronic and procedural safeguards to protect your nonpublic personal information at all times.

ONLINE LIFE INSURANCE

We have partnered with ORG, Inc. to develop and market an online life insurance quotation system that allows individuals to enter their information and receive competitive quotes from major insurance carriers online. In most cases the application can also be completed online. There is also a direct toll free line to speak to a customer service representative, as well as an email link to ask questions or receive assistance with the quotation or application process. The quotes can be obtained from our website.

This system eliminates speaking to numerous agents who call with quotes, which is the model used by many websites that market insurance quotes. For people who wish to complete the process totally on their own, and like to evaluate numerous quotes independently before applying for insurance, this site should satisfy their needs. Quotes are free and no money is exchanged until the individual is approved for the policy quoted.

Of course, anyone who is interested in talking to an insurance advisor, who will meet with the client in the traditional face to face manner, simply needs to contact the company either by telephone or email to set up an appointment. Through the ORG network, we can assist individuals outside the state of NJ to locate insurance professionals who can meet with them face to face. The toll free number to call, outside NJ, is (855) 802-4123. Within the state of NJ, clients can contact me directly.

INVESTOR PSYCHOLOGY: BUY LOW, METHODICALLY & DISCIPLINED

Investor psychology has been a topic receiving much attention recently, as many of the tried and true philosophies of investing have been questioned. With all of the talk of a lost decade of returns, the focus has been on how to beat the market consistently, utilizing everything from alternative investments to holding physical commodities. As we’ve discussed time and time again, market timing and excessive trading can be very detrimental to a portfolio. As James Stewart stated in the July issue of Smart Money, “If market peaks tend to be unremarkable, market lows tend to arrive when times seem apocalyptic”. That’s why I continue to believe buying quality funds in as many sectors of the economy as you can, and dollar cost averaging into them constantly, is still the best overall strategy.

* THE S&P 500, THE DJIA AND THE NASDAQ ARE UNMANAGED INDEXES THAT ARE WIDELY USED AS INDICATORS OF MARKET TRENDS. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE OF THESE INDEXES DOES NOT REFLECT FEES AND CHARGES ASSOCIATED WITH INVESTING. IT IS NOT POSSIBLE TO INVEST DIRECTLY IN AN INDEX.

Dollar Cost Averaging through a systematic savings plan is an excellent way to build an account without a sizeable initial investment. Saving a portion of our pay each month is very important. Company sponsored pension plans are one method to save and should be used for retirement. Other systematic investment accounts, SUCH AS ROTH IRA’S, TRADITIONAL IRA’S, COVERDELL ACCOUNTS, 529 PLANS, BROKERAGE ACCOUNTS AND ANNUITIES can also be opened, and debited directly from your checking or savings account. For more information, just call to set up an appointment.

REFERRALS ARE ALWAYS WELCOME

COMPANY INFORMATION:

Investment Advisory Services offered through:

Jersey Benefits Advisors
P.O. Box 1406
Ocean City, N.J. 08226
Phone: 609 827 0194
Fax: 609 861 9257
Email: kaighn@jerseybenefits.com
Http://www.jerseybenefits.com

Securities offered through:

Transamerica Financial Advisors, Inc.
A registered Broker/Dealer
570 Carillon Parkway
St. Petersburg, FL 33758-9053
800-245-8250
Member FINRA & SIPC
Transamerica Financial Advisors, Inc. is
not affiliated with Jersey Benefits Advi-
sors.

Third Party Administration and Insurance
Services offered through:

Jersey Benefits Group, Inc.
P.O. Box 1406
Ocean City, N.J. 08226
Phone: 609 827 0194
Fax: 609 861 9257
Email: kaighn@jerseybenefits.com
Http://www.jerseybenefits.com/

All opinions expressed in this newsletter are
solely those of John Kaighn & Jersey Benefits
Advisors.

LD 41031-07/11

Choosing Investments

2011-06-15T07:50:00.000-04:00

Like every investor, you want to choose investments that will provide the growth and income you need to meet your financial goals. To do that, it's important to understand what your investment choices are and how different types of investments put your money to work. Risks and potential returns vary greatly from investment to investment. Stocks offer you the potential for growth, but they can be volatile. Bonds generally provide income and lower volatility, but also lower potential for growth. Treasury bills, CDs and money market funds are insured, but may not keep up with inflation.

Think About Your Risk Tolerance and Needs

As a general rule, the younger you are and the more time you have to reach a financial goal, the more investment risk you can afford to take. That means, for example, when you're in your twenties and just starting your career, you may be able to take a more aggressive approach to investing for long-term goals. Aggressive investing means choosing investments that have the potential to provide greater return over an extended period. But these investments also expose you to more risk in the short term because their prices are volatile, which means they might move up and down rather quickly within a short period.

On the other hand, when you're in your late 50s or 60s, you'll probably want to be more cautious about taking on investment risk, since your portfolio may not have a chance to recover from a market downturn before you need to start drawing on your retirement assets. When you retire, your goal is not only providing continued growth while taking limited investment risk but also ensuring that you have a stream of income that can cover a portion of your living expenses.

But these are just guidelines. No single approach to choosing investments will work for everyone or will be right for every situation. Even when you're young, there may be circumstances that make it unwise to take a lot of investment risk—if, for example, you're still in school or have significant debt. Or you may simply be uncomfortable with that approach. Similarly, there may be situations when it makes sense to take more risk in your portfolio later in your working life. So you'll want to tailor your strategy to your own unique needs and circumstances.

What to Look for in All Investments

What does make sense for all investors is concentrating on investments that, however different they are from each other, share these important characteristics:
* The investments are easy to evaluate because there's lots of information about them. Regulators require that certain information be disclosed to investors through documents such as mutual fund prospectuses, corporate filings for stock issued by public companies that trade on the major stock markets and prospectuses or offering statements for bonds. In addition, you can find a wealth of real-time and historical market data for stocks, bonds, mutual funds and other securities on FINRA's Market Data page.
* The investments are easy to buy and sell, either through a brokerage account or in some cases directly from the issuer. Thinly traded stocks or securities that aren't listed on a major exchange are rarely a good idea for most investors.
* The sales charges for buying and selling the investments are clearly explained, as are any fees for selling within a certain time frame. FINRA's Fund Analyzer can help you compare up to three different mutual funds, classes of a single fund or exchange-traded funds.
The investments are registered with the SEC or your state's securities regulator, and the salespeople who sell them are licensed by FINRA. Use the SEC's EDGAR Database to check whether the investments are registered, and use FINRA BrokerCheck to confirm that a broker is licensed to sell securities.
* You understand the risks of the investment and how it works.

This article is an excerpt from the Smart Investing section of the Financial Industry Regulatory Authority's Website. To read more articles on investing go to FINRA

Improve Your Business Through Networking

2011-05-31T08:11:00.000-04:00

As an entrepreneur you'll come in contact with numerous other business people as you conduct your day to day operations. They could be lawyers, suppliers, customers or other business services providers. These individuals are important to your business in many ways. If they bought your product or service or if you hired them, you can also gain their business knowledge, experience, ideas, and advice if you stay connected to them. This is what networking is all about. Networking is when two or more different businesses stay in contact on a regular basis to help build and improve each others business.

Some of the benefits which can be gained by talking to other business people are:

• Knowledge or information that you didn't have before

• Advice on how to solve a current business problem

• Leads to a new business project or opportunity

• Joint ventures and cross promotion deals

• Learning important skills that you didn't have before

• Constructive criticism that improves your business

• Brainstorming that sparks a profitable business idea

• Encouragement and motivation for your projects

There are several ways to network with other business people. You could participate in business expositions and trade shows. You might visit business clubs and associations or take part in on-line business related forums, e-mail discussion groups or social networks. By using your creativity, you could come up with even more ideas.

If you have the time, you could start your own networking group. You could hold meetings at a local seminar room, hotel, or at your own business facility. If you want to hold meetings on-line you can use a private chat room. You should publish a print or e-mail newsletter to keep members informed of meeting dates and times, or other pertinent information about your business.

It is helpful to keep all of your business associates' contact information in one place. Make sure it is organized by business type or profession for easy searching, so when you need some advice on a new marketing campaign you can call your marketing expert. Be sure to follow up and stay in contact by phone or email on a regular basis.

Another fantastic way to network with other businesses is to operate a joint venture. This is when two or more businesses join together to work on a project for a set period of time. Participating in joint ventures with other businesses can increase your chances of beating your competition, increase your sales and increase your profits quickly. Other advantages of a joint venture are:

• money can be saved when businesses share operating costs

• referrals can come from other businesses

• valuable time can be saved when businesses share the workload

• new products and services can be offered to your customers

• new business associates can be gained

• money can be saved by sharing advertising and marketing costs

• advice and information can be obtained from other businesses

You can find joint venture opportunities with businesses online or
offline. I try to find businesses that have the same target audience, but are not in direct competition with my business. Here are a few ways to find joint ventures online:

• subscribe and participate in e-mail discussion groups, online forums and newsgroups that deal with your target audience

• subscribe to e-zines that deal with your targeted audience

• note on your Web site or e-zine that you are interested in doing joint ventures, such as exchanging articles utilizing an article directory.

• search in your favorite web directories and search engines to find businesses for joint ventures online

Once you find a business simply e-mail them your proposal.
Explain to the business owner the benefits of the joint venture.
Discuss why it would be a win/win situation for both of your businesses. Provide feedback regarding their business, Web site, products and services. Using the methods above will enhance your chances of constructing a profitable joint venture.

John Kaighn

Jersey Benefits Advisors

The Kaighn Report

Best Selling Electronics from Amazon

JERSEY BENEFITS ADVISORS INVESTOR'S NEWSLETTER SPRING 2011

2011-04-07T16:03:00.001-04:00

MARKET WATCH

As 2011 dawned, concerns about unemployment, economic growth, fiscal responsibility and inflation were topics being discussed when attempting to ascertain prospects for the continuation of our economic recovery. Spending initiatives in several states sparked controversy and healthy debate about programs, as well as the taxes that pay for them, to the point where even the Federal government managed to cut $6 billion from the current fiscal budget, and delay a shutdown of nonessential government offices. Meanwhile, the Dow Jones Industrial Average was on the way to its second largest first quarter gain in its history.

While the issues discussed above certainly are meaningful topics and impact our economy and the markets, the major factors affecting the global economy came out of the blue and weren’t on anyone’s radar. Those issues were summed up by Alan Abelson in Barron’s as he wrote, “The first three months encompassed just about everything shy of Armageddon. A fiery contagion of revolution and civil war in the Middle East and North Africa that toppled governments and sent dictators scurrying; a horrendous earthquake, nuclear meltdown and tsunami in Japan; chronic financial woes that beset and threatened to dismember the European Union, exploding oil and food prices - gad, we get the heebie-jeebies just reciting the lugubrious litany”.

The heebie-jeebies aside, it has been a remarkable quarter insofar as international events and the markets are concerned. Whether this revolutionary fervor will result in populations of Middle Eastern countries choosing less authoritarian Western style regimes, or succumbing to Hamas and Hezbollah remains to be seen. Securing the flow of oil from the area, as witnessed by the military incursion in Libya, forces us all to recognize the realities we face for our dependence on energy from this region. Whether you believe in “drill baby drill” or “green energy”, it is time for us to develop a comprehensive energy policy that utilizes all of the options available for our energy needs. Meanwhile, be prepared to pay more at the pump.

As I stated earlier, the DJIA* had a great first quarter climbing 6.4% and closing at 12,319.73 while the S&P 500* finished at 1,325.83 for a 5.4% increase. The NASDAQ* added 128.2 points and ended the quarter at 2,781.07 for a 4.8% gain. So much for the “New Normal” we discussed in the last issue.

These first quarter gains were achieved, despite a brief pullback in the various indices after the earthquake in Japan. The indices gave up all of their gains by mid March, only to absorb the shock and rebound to current levels. Where things go from here depends largely on earnings, employment, inflation, fiscal policy, monetary policy, international political events and of course, Mother Nature. The recent pullback in March does not even qualify as a correction (a 10% drop in an index), so with all of the issues facing us, one can never rule out a correction in the market coming at any time. The last correction was in July. As I have said many times before, corrections are healthy and present opportunities for deploying more capital. Of course, they are never pleasant.

As the second quarter unfolds, I expect to see oil prices settle down, inflation to remain benign and the Fed to begin discussing higher interest rates. The stock market is still 15% below the peak set in 2007, so a slow, steady ascent from here toward the 2007 highs would be welcome.

ONLINE ACCESS TO YOUR ACCOUNTS

For those of you who wish to access your account information online, the process is much easier than at any time in the past. Even if you have Pershing accounts, annuities or mutual funds with various companies, you can now access everything in one location from our website. Here is the link: Jersey Benefits Group, Inc.. Once you get to the Jersey Benefits website, you can access the link for your account under Securities Products or Investment Advisory. Under either heading go to the first choice, and look for the link for Pershing accounts only or Consolidated Statements. For Pershing only accounts, you need to contact me by phone or email for a password. There is a form to sign. For Clients with Consolidated Statements, you need to call or email to obtain a temporary password.

THE ECONOMIC AND POLITICAL OUTLOOK & MORE

Once again, earnings season is upon us, and the quarterly results of companies will compete with economic news, international events and commodity prices for investors’ attention. Continued improvement in earnings, and a positive outlook for guidance issued by US companies, could further improve the employment picture. Progress in the area of job creation is slowly being achieved.

The Labor Department reported jobless claims in the week ended March 26 fell to 388,000 and the unemployment rate fell to 8.8%, which indicates modest improvement for the labor market. Further evidence of improvement on the labor front came with the March payroll report, released by the Bureau of Labor and Statistics, indicating an addition of 216,000 jobs. The household survey, which is another measure of job growth, reported 291,000 additional jobs added in March . While these numbers leave us 7.25 million jobs down from the total number reported before the recession, any progress is welcomed.

As the government faces another possible shutdown as early as Friday, April 8th, Congress continues to bicker over whether to trim $55 billion more from the current budget. While it would be a small step in the right direction, it remains to be seen if a compromise can be reached. I certainly don’t mean to minimize the impact of $55 billion on the budget, but the reality is when you look at a budget of $3.7 trillion, about 1/3 of which is borrowed, one realizes something has to be done. Either $1.5 trillion needs to be cut, or taxes need to be increased to pay for the spending deemed important to the populace. The alternative is crushing debt on our children, which I don’t think is sustainable.

The price of gold has been flat for the quarter, but not without some volatility. In February the price swooned 7% but has since recovered its losses. Gold, silver and other commodities are positions which should be part of an investment strategy. Owning the physical commodities themselves is cumbersome and expensive, so my recommendation is to gain exposure through commodities funds, ETF’s or stocks of companies that mine or handle commodities. Obviously, we never want to put all of our money into one asset class, because concentrating risk is usually a recipe for disaster.

My philosophy is and always has been to diversify across as many sectors of the economy as you can afford, and dollar cost average into your portfolio often. While this strategy can’t guarantee against losses in the short term, as most of us have experienced over the last three years, patience and discipline do produce rewards. Thanks again for your continued confidence in me, and know that I truly appreciate your business. Feel free to call or email with questions.

* THE S&P 500, THE DJIA AND THE NASDAQ ARE UNMANAGED INDEXES THAT ARE WIDELY USED AS INDICATORS OF MARKET TRENDS. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE OF THESE INDEXES DOES NOT REFLECT FEES AND CHARGES ASSOCIATED WITH INVESTING. IT IS NOT POSSIBLE TO INVEST DIRECTLY IN AN INDEX.

DOLLAR COST AVERAGING THROUGH A SYSTEMATIC SAVINGS PLAN IS AN EXCELLENT WAY TO BUILD AN ACCOUNT WITHOUT A SIZEABLE INITIAL INVESTMENT. SAVING A PORTION OF OUR PAY EACH MONTH IS VERY IMPORTANT. COMPANY SPONSORED PENSION PLANS ARE ONE METHOD TO SAVE AND SHOULD BE USED FOR RETIREMENT. OTHER SYSTEMATIC INVESTMENT ACCOUNTS, SUCH AS ROTH IRA’S, TRADITIONAL IRA’S, COVERDELL ACCOUNTS, 529 PLANS, BROKERAGE ACCOUNTS AND ANNUITIES CAN ALSO BE OPENED, AND DEBITED DIRECTLY FROM YOUR CHECKING OR SAVINGS ACCOUNT. FOR MORE INFORMATION, JUST CALL TO SET UP AN APPOINTMENT. REFERRALS ARE ALWAYS WELCOME.

COMPANY INFORMATION:

Investment Advisory Services offered through:
Jersey Benefits Advisors
P.O. Box 1406
Ocean City, N.J. 08226
Phone: 609 827 0194
Fax: 609 861 9257
Email: kaighn@jerseybenefits.com
Http://www.jerseybenefits.com

Securities offered through:
Transamerica Financial Advisors, Inc.
A registered Broker/Dealer
570 Carillon Parkway
St. Petersburg, FL 33758-9053
800-245-8250
Member FINRA & SIPC
Transamerica Financial Advisors, Inc. is
not affiliated with Jersey Benefits Advi-
sors.

Third Party Administration and Insurance
Services offered through:
Jersey Benefits Group, Inc
P.O. Box 1406
Ocean City, N.J. 08226
Phone: 609 827 0194
Fax: 609 861 9257
Email: kaighn@jerseybenefits.com
Http://www.jerseybenefits.com/

All opinions expressed in this newsletter are
solely those of John Kaighn & Jersey Benefits
Advisors.

LD 40098—04/11

Variable Annuity Vindication

2011-04-05T10:00:00.000-04:00

Many of my clients have invested in the Transamerica and MetLife Variable Annuities over the years, so I wanted to refer you to an article in the Wall Street Journal about variable annuities and the Guaranteed Minimum Income Benefit. This rider protects the assets so your account will continue to grow in a down market. The following article by Leslie Scism sums up perfectly the reasons why the variable annuity should be a part of most investment portfolios, and vindicates many advisors who realized there was really no other comparable protection against downside risk.

Long Derided, This Investment Now Looks Wise

by Leslie Scism

One of the best investments of the past decade was one of the most derided: the variable annuity. But investors who want in on the action now are in for a shock, as the juiciest deals have disappeared from the market.

Variable annuities, a tax-advantaged investment account that holds a type of mutual fund, are sold by insurers, and most offer some form of investment guarantee for an additional fee. For years, they were attacked for being too expensive. Why pay for a guarantee to protect against a stock-market decline, the argument went, when stocks continued their inexorable march upward?

Then stocks plunged, and variable-annuity guarantees no longer looked expensive. In fact, insurers, in a move to build market share, had underpriced many of them. Suppose an investor owned a variable annuity that tanked in value last year. No matter. Under the most-generous contracts, insurers pledged to pay customers lifetime retirement income based on past market gains in their underlying funds, plus minimum annual increases in years the market is sluggish or down.

Because of such guarantees, many holders of variable annuities actually saw their accounts increase 6% or more in value last year, when the Standard & Poor’s 500-stock index dropped nearly 39%.

“When I watch friends bemoaning the market, I feel guilty saying anything, actually,” says Amy White, a 67-year-old retired accountant in Dallas. She and her late husband invested hundreds of thousands of dollars in variable annuities early this decade, and their funds rose as the market neared its 2007 peak. While they fell last year, the guaranteed amount—on which Ms. White’s retirement-income checks will be based—is still more than double the invested amount.

Click here to read the rest of the article

Learn how to get your paralegal certification and about the national
federation of paralegal associations.

John Kaighn

Jersey Benefits Advisors

The Kaighn Report

Jersey Benefits Advisors Form ADV Part 2A

2011-03-28T09:07:00.005-04:00

Part 2A of Form ADV: Firm Brochure

Item 1 Cover Page

J/M Kaighn, Inc.

t/a

Jersey Benefits Advisors

CRD: 125129

Date: 12/31/2010

Physical Address: 34 Doe Dr.
Woodbine, NJ 08270
Mailing Address: PO Box 1406
Ocean City, NJ 08226
Telephone: (609) 827-0194
Fax: (609) 861-9257
Email: kaighn@jerseybenefits.com
Website: Jersey Benefits Advisors

This brochure provides information about the qualifications and business practices of Jersey Benefits Advisors. If you have any questions about the contents of this brochure, please contact us at (609) 827-0194 or kaighn@jerseybenefits.com. The information in this brochure has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority. Additional information about Jersey Benefits Advisors also is available on the SEC's website at www.adviserinfo.sec.gov.

Item 2 Material Changes

None

Item 3 Table of Contents

Item Number       Item                                                                                                Page
4                       Advisory Business, Licenses & Education ............................................  1
5                        Fees & Compensation ....................................................................... 2
6                        Performance Based Fees ..................................................................... 3
7                       Types of Clients ................................................................................ 4
8                        Methods of Analysis, Investment Strategies and Risk of Loss..................... 5
9                        Disciplinary Information ..................................................................... 6
10                      Other Financial Industry Activities and Affiliations .................................. 7
11                      Code of Ethics, Participation or Interest in Client
                          Transactions and Personal Trading........................................................ 8
12                      Brokerage Practices ............................................................................ 9
13                      Review of Accounts .......................................................................... 10
14                      Client Referrals and Other Compensation............................................... 11
15                      Custody .......................................................................................... 12
16                      Discretion ....................................................................................... 13
17                      Voting Client Securities .................................................................... 14

Item 4 Advisory Business

J/M Kaighn, Inc. t/a Jersey Benefits Advisors is a Registered Investment Advisor in the state of New Jersey. The firm's CRD Number is 129125. Jersey Benefits Advisors provides investment and insurance advice to clients, and publishes a quarterly newsletter.

John H. Kaighn is the only Investment Advisory Representative of the firm, and he provides investment supervisory services, manages client accounts and furnishes investment advice through consultation with clients. Mr. Kaighn has been a registered IAR in the state of New Jersey with Jersey Benefits Advisors since 1996. His date of birth is 9/11/1952.

John H. Kaighn has a BA and an MA from Rowan University aka Glassboro State College, has FINRA licenses series 7,26 & 63 and has been a registered representative since 1993. Mr. Kaighn currently holds securities licenses in the states of CO, DE, FL, MD, NC, NJ, NY & PA and offers securities through Transamerica Financial Advisors, Inc.

John H. Kaighn has a life, health and variable life insurance license in the state of New Jersey. Mr. Kaighn is licensed with numerous insurance carriers and Jersey Benefits Group, Inc. is a licensed insurance agency in the state of New Jersey. Jersey Benefits Group, Inc. also offers Pension Consultation and TPA Services.

Item 5 Fees and Compensation

Compensation for advisory services is primarily derived from the following sources:

1. Front End Sales Commissions
2. Contingent Deferred Sales Charges
3. Percentage of Assets Under Management.

Front End Sales Commissions are generated at the point of sale and are commonly called A shares. These commissions vary by fund company. A shares usually have a 12b1 fee of .25% ($00.25 per $100.00 of assets under management) which is compensation for ongoing service and advice to clients who utilize A shares. This portion of compensation from A shares is considered a Percentage of Assets Under Management. Commissions for sales of stocks, bonds and ETF's are generated at the purchase and sale of these securities, and for clients holding mutual funds with 12b1 fees, there is no additional asset under management charge for holding stocks, bonds or ETF's.

Contingent Deferred Sales Charges are generated when a client sells an investment prior to the holding period, which can be from 9 years on some annuity products, to 6 years on B shares of mutual funds, or 1 year on C shares of mutual funds. The CDSC usually declines each year during the surrender period. This compensation method is only recommended for clients whose investment time horizon matches the surrender time line of the share class. The idea is to AVOID paying the CDSC. The 12b1 fee for products with a CDSC is usually 1.00% during the surrender period and declines to .25% when the surrender period has ended, in most cases. The 12b1 fee for C shares remains 1.00% ($1.00 per $100.00 of assets under management).

Percentage of Assets Under Management This type of compensation is usually generated through service fees associated with mutual funds, which are commonly known as 12b1 fees and provide compensation for ongoing advice and service. If a client prefers to purchase mutual funds which don't have a 12b1 fee, then a fee will be charged on total assets under management, which is 1.00%. Hourly charges may also be assessed in certain situations. Hourly charges and additional asset based fees are not charged if a client utilizes funds which have a 12b1 fee.

Item 6 Performance-Based Fees and Side-By-Side Management

Clients are not charged performance based fees.

Item 7 Types of Clients

Jersey Benefits Advisors generally provides investment advice to individuals, pension and profit sharing plans, trusts, estates, charitable organizations, corporations and other business entities. Most clients are generally invested in several, if not all of the the following types of securities:

1. Equity Securities (common stock of large, medium and small corporations)
2. Corporate Debt Securities (bonds)
3. Certificates of Deposit
4. Investment Company Securities (mutual funds, variable annuities, variable life insurance and ETF's)
5. Municipal Securities
6. United States Government Securities

Item 8 Methods of Analysis, Investment Strategies and Risk of Loss

Jersey Benefits Advisors utilizes Charting, Fundamental Analysis, Techmical and Cyclical Analysis to assess securities. The main sources of information for investment analysis are:

1. financial newspapers and magazines
2. research materials prepared by others
3. corporate rating services
4. annual reports, prospectuses and filings with the Securities and Exchange Commission
5. company press releases
6. inspection of corporate activities.

Investment strategies primarily consist of long term purchases of diversified assets which are rebalanced periodically. As with any investment past performance is no guarantee future results, and there is always a risk of loss.

Item 9 Disciplinary Information

Jersey Benefits Advisors has never had any disciplinary actions initiated against it.

Item 10 Other Financial Industry Activities and Affiliations

Jersey Benefits Advisors has arrangements with various other entities which are material to its advisory business or clients. John H. Kaighn is a Registered Representative with Transamerica Financial Advisors, Inc., which is a registered broker/dealer. Jersey Benefits Advisors also has arrangements with Jersey Benefits Group, Inc., a licensed insurance agency and third party administrator to assist meeting client needs for insurance and pension services. Jersey Benefits Advisors sells products and services, other than strictly advice to its clients.

Item 11 Code of Ethics, Participation or Interest in Client Transactions and Personal Trading

Jersey Benefits Advisors maintains a Code of Ethics and practices under the fiduciary standard of care. In order to help a client establish a position in a fund with a high minimum purchase price, a principal purchase may be used on occasion. Jersey Benefits Advisors also acts as a broker and effects securities transactions for compensation for clients.

Clients have the choice of maintaining a fee or commission based relationship. Transamerica Financial Advisors, Inc. is the broker/dealer recommended to clients and they review all transactions. Pershing Brokerage Accounts are also recommended to many clients. Other brokers may be used if the client's needs dictate.

Item 12 Brokerage Practices

Jersey Benefits Advisors utilizes brokerage practices to assist clients in choosing the most cost effective product to meet their investment, insurance and other financial needs. Securities transactions are provided through Transamerica Financial Advisors, Inc. and insurance brokerage services are provided through Jersey Benefits Group, Inc.

Item 13 Review of Accounts

All client accounts are constantly reviewed, no less than quarterly, by John H. Kaighn. Clients with multiple accounts receive consolidated semiannual statements, prepared by the advisor. All clients receive monthly or quarterly statements directly from the B/D, investment company or insurance company with custody of the client's assets. Online access for clients is available through the company website, which is Jersey Benefits Advisors.

Item 14 Client Referrals and Other Compensation

Jersey Benefits Advisors always accepts referrals, but does not directly or indirectly compensate any person for client referrals.

Item 15 Custody

Jersey Benefits Advisors does not maintain custody of client assets. Client accounts are held in the individual's name at Pershing, banks, insurance companies or investment companies. No client funds are commingled with the assets of Jersey Benefits Advisors.

Item 16 Investment Discretion

Jersey Benefits Advisors does not have the authority to determine, without client consent, the securities to be bought or sold, the amount of securities to be bought or sold, the broker or dealer to be used or the commission rates paid. An opt out rebalancing program exists, and to date no client has opted out. Clients certainly have the right to opt out of rebalancing programs, if they so desire.

Item 17 Voting Client Securities

All clients vote their own securities.

Technology, Unemployment, and Our Children’s Future

2011-02-10T08:19:00.001-05:00

Once in a while I like to add an article from a guest writer. The ensuing article is one written by Hunter Richards, who really did his homework on this discussion of the impact of technology on productivity, employment and education. If you'd like to leave him a comment, you can go to: The Software Advice Blog.

This is a guest post by Hunter Richards, a blogger who covers web-based accounting software and other technology trends.

Got a teen playing Wii instead of doing homework? You might want to share this post.

Despite the tremendous benefits of information technology (IT), it comes at a human cost – the displacement of less-skilled employees. As software and systems automate an increasingly large portion of business processes, the displacement is affecting a wider set of workers. So despite an improving economy, 9.5% unemployment might last longer than many think.

Here we walk through a fairly simple story of man versus machine. It’s not a new story, but we went to the effort of pulling together and visualizing the relevant data.

Our conclusion? Drop the Wii-mote and hit the books.

IT spending has risen dramatically over the last 40 years…

IT spending has steadily risen since 1970. Trendlines and new opportunities like cloud computing suggest that the current dip in spending is only temporary.

…making us more productive…

Technology has made labor more productive. There’s a long-term upward trend in labor output rates, and it isn’t slowing down.

…which has led to rapid growth in corporate profits.

The resulting productivity has been great for business – greater productivity means higher profits. But these profits don’t benefit everyone. They accrue to the executives and shareholders.

IT is slowly replacing many functions. There’s an ever-widening divide in the labor market between skilled occupations and what one might call “low-level jobs” – simple clerical roles, plant-floor workers, and low-level support roles.

While national unemployment rates have ebbed and flowed…

…the uneducated are consistently left behind…

This polarization between highly-skilled and less-skilled workers is part of what’s eroding the middle class, pushing more and more people into the low income bracket.

…and wealth has shifted toward the highest earners.

The less-educated workers who manage to keep their jobs are falling further and further behind in the national income distribution as the relative value of their services declines.

Alas, high-tech industries are growing…

So how can you avoid being replaced by a machine? You’ll need to be one of the people who work in an advanced field that still requires highly-skilled human capital. Take the IT field, for example. The Tech Pulse Index tracks the growth of national economic activity in technology by combining data on employment, investment, production, shipments, and consumption. The Tech Pulse Index has risen sharply (with the exception of the dot-com bust around the year 2000), reflecting continued demand for high-tech workers. The same is true in other engineering disciplines, healthcare and finance.

…but an advanced education is required.

Are we educating people enough to slow the widening of labor market gaps? The graph above shows the percentage of all 18- to 24-year-olds enrolled in degree-granting institutions since 1970. There’s an upward trend, but is it growing fast enough?

IT is good for society in the long term, but it’s a double-edged sword when considered together with labor market trends. Sure, the current economic despair owes its severity to many different issues – offshoring of jobs, the real estate collapse, and the national debt are just a few – but education and income disparities are long-term problems that demand attention. We must align education growth with productivity growth to close the gaps.

Will this deus ex machina lead to an age of renewed human potential, or will it harm the well-being of the majority?

Jersey Benefits Advisors Investors Newsletter Winter 2011

2011-01-20T09:35:00.003-05:00

MARKET WATCH

By the time you read this newsletter, 2010 will be cast upon the dustbin of history, Auburn will be the national football champion, and President Obama will be dealing with a very different Congress. As I mentioned in the fall newsletter, the consensus was the House would go to the Republicans and the Senate would remain in Democratic hands. This scenario played out exactly as anticipated, and you might think a couple of years of center to right policy could be expected.

Well, if the only bipartisan effort of 2010 completed by the lame duck Congress is any indication of the future, it looks like long term fiscal stability is still the last issue of importance in Washington. In this compromise, according to Thomas Donlan in a Barron’s editorial, “President Obama and soon-to-be House Speaker Boehner agreed to settle their policy differences by giving each other what he most wanted. The President received a temporary extension of long term unemployment benefits and a temporary cut in the Social Security payroll tax; Boehner received extension of all the tax cuts enacted temporarily back in 2001-03 and an assortment of temporary tax credits for business. Economists familiar with American political behavior note that neither side gave up any cherished spending or tax breaks; both sides compromised at the expense of long term fiscal stability.” The University of Maryland’s Peter Morici bluntly stated, “Instead of each side getting half of what it wanted, Washington feasted and everyone got everything they wanted and more”. Welcome to 2011!

Despite a difficult economic environment coined “The New Normal”, the markets enjoyed a very good year. Upon further study I learned the “New Normal”, which I suppose replaced the “New Paradigm”, isn’t such a novel concept the way it was used by Pimco Bond guru, Bill Gross, to describe what he saw as a period of extended slower growth, smaller asset returns and narrower profit margins than in decades past. The “New Paradigm”, for those of you who may have missed it, or forgot about it, was a term coined back in the days of the dotcom mania. The idea was profits were no longer as important as the business concept itself. We all know where that brainstorm led us.

As it turns out, the term “New Normal” may be as old as hard times itself. Consider this quote from Business Week: “In 1939, a decade into the worst economic slump in American history, New York City Mayor Fiorello La Guardia remarked: ‘We must realize this is not a temporary depression, but a New Normal and adjust ourselves accordingly.’ That year, New York’s Central Park was filled with people living in tents and the world’s tallest tower had so many vacancies that it was nicknamed the ‘Empty State Building’. Normals seem permanent. They never are.”

Nothing has been normal about the markets the last three years, and 2010 was no exception. The Dow Jones Industrial Average* ended the year at 11,577.51 which is an 11% gain. The S&P 500* closed at 1,257.64 for a 12.8% increase, while the NASDAQ* finished the year at 2,652.87 for a 16.9% gain. Since the average annual gain for the S&P 500* between 1926 and 2009 was 9.8%, one could say this was better than a normal year for the index, and much better than was anticipated just two years ago.

So, Happy New Year to you and remember, the markets can be gut-wrenching at times, but with a diversified and unemotional approach they can also be very profitable. Thanks for your continued confidence in me.

Gold closed at $1,420.55 per oz. for 2010. That’s a 26.7% increase for the year. The graph above shows the history of gold from 1971 to the present. Caveat emptor????

THE CHASM BETWEEN FEELINGS AND FACTS

A recent Bloomberg poll conducted in October 2010 found that 2 out of 3 likely voters in the November midterm election said that taxes had gone up, the economy had shrunk and the billions of dollars lent to banks as part of the Troubled Asset Relief Program (TARP) would never be recovered. The most significant finding about the poll is the dichotomy between belief and reality. The facts are that since 2009, Congress and the Obama Administration have cut taxes by $240 billion and growth has continued uninterrupted in the US and most major economies since the recession ended in June 2009. Furthermore, the Treasury expects a $16 billion profit on the money lent to the banks during the TARP rescue. They must have polled people who don’t read this newsletter!

THE POLITICAL AND ECONOMIC OUTLOOK & MORE

As I mentioned in the Market Watch segment, there is a new Congress in Washington. With the House and Senate controlled by different parties, gridlock is a possibility, which a cynic might say could cause Congress to do nothing, and that would be a good thing. I have to admit I’ve uttered those exact words, especially when I get frustrated with the direction of government. After the deal on taxes and unemployment it does seem like the cynic’s scenario might be preferable.

However, being the optimist I am, I think this just might be a time when some productive action could be in the wind in regard to entitlement programs, taxes and budget deficits. It also helps to add some perspective to the problems we currently face as a country. To do that, let’s look at another Bloomberg poll conducted in September 2010 which revealed that, “77% of global investors expected the European monetary union would crumble and at least one struggling government would default, all despite a $1 trillion euro zone backstop. Greece and Ireland may have stared into the white light of fiscal death, but they were yanked back to earth by their neighbors, wounded but without default”.

Many people are concerned about the fiscal condition of some of the states in our own union. I had the chance to hear St. Louis Federal Reserve President James Bullard address the financial health of our own states against the backdrop of the conditions in Europe. His response was enlightening as he remarked,” There is no imminent crisis with any US state as in Europe where Greece and Ireland were borrowing 100% of GDP. US state’s borrowing is more like 10% of GDP. In the US it is more about making policy decisions like lower spending, higher taxes or both”.

With spending and deficits at the state and federal levels in the crosshairs of many in Congress, and the Obama Administration at least feigning a move to the center, perhaps there may actually be some headway made toward fiscal sanity. Well, one could hope!

As we enter 2011, it helps to be aware of the problems we face as a nation. There are many people concerned about the unprecedented monetary interventions, and the staggering debt load of the government. The extraordinarily low interest rates we have now will need to be increased, but the economy, while improving, is not growing at a level that can even begin to bring the unemployment rate back down to acceptable levels. While energy and food prices are rising, the impetus for major inflation, wage growth, has no traction. So I think for now, interest rates will stay low and inflation will remain tame. The Fed will have to monitor this closely and act decisively if growth accelerates.

DOLLAR COST AVERAGING THROUGH A SYSTEMATIC SAVINGS PLAN IS AN EXCELLENT WAY TO BUILD AN ACCOUNT WITHOUT A SIZEABLE INITIAL INVESTMENT. SAVING A PORTION OF OUR PAY EACH MONTH IS VERY IMPORTANT. COMPANY SPONSORED PENSION PLANS ARE ONE METHOD TO SAVE AND SHOULD BE USED FOR RETIREMENT. OTHER SYSTEMATIC INVESTMENT ACCOUNTS, SUCH AS ROTH IRA’S, TRADITIONAL IRA’S, COVERDELL ACCOUNTS, 529 PLANS, BROKERAGE ACCOUNTS AND ANNUITIES CAN ALSO BE OPENED, AND DEBITED DIRECTLY FROM YOUR CHECKING OR SAVINGS ACCOUNT. FOR MORE INFORMATION, JUST CALL TO SET UP AN APPOINTMENT. REFERRALS ARE ALWAYS WELCOME.

COMPANY INFORMATION

Investment Advisory Services offered through:

Jersey Benefits Advisors

P.O. Box 1406

Ocean City, N.J. 08226

Phone: 609 827 0194

Fax: 609 861 9257

Email: kaighn@jerseybenefits.com

http://www.jerseybenefits.com/

Securities offered through:

Transamerica Financial Advisors, Inc.

A registered Broker/Dealer

570 Carillon Parkway

St. Petersburg, FL 33758-9053

800-245-8250

Member FINRA & SIPC

Transamerica Financial Advisors, Inc. is

not affiliated with Jersey Benefits Advisors.

Third Party Administration and Insurance Services offered through:

Jersey Benefits Group, Inc

P.O. Box 1406

Ocean City, N.J. 08226

Phone: 609 827 0194

Fax: 609 861 9257

Email: kaighn@jerseybenefits.com

Email: Billcola@yahoo.com

Http://www.jerseybenefits.com/

All opinions expressed in this newsletter are solely those of John Kaighn and Jersey Benefits Advisors.

LD39315-01/11

2010-12-21T14:53:00.004-05:00

As the holidays rapidly approach, I would like to take a few moments to wish you a happy and joyous Christmas and Hanukah, as well as a healthy and prosperous New Year. I also wanted to remind you I am always here to assist you with any questions or concerns you might have about your investments or insurance needs. Please feel free to contact me by phone or email any time you’d like to discuss your investments or schedule an appointment.

The economy seems to have averted the dreaded double dip recession and is definitely moving in the right direction. At this juncture, it is difficult to tell exactly where we are in the new business cycle, but my guess is we are still in the recovery phase, as GDP has not surpassed the level achieved before the recession in real dollars. Yet, when you look at profit margins, productivity and the Institute for Supply Management index, it seems as though we might be in mid cycle. Of course, if you focus on the unemployment rate, consumer confidence and capacity utilization you might think we were still in recession. I guess it is safe to say that when you have one of the worst recessions in memory, the recovery will be at least as unpredictable.

According to PNC Wealth Management, the cost of buying all of the gifts in the holiday classic song “The 12 Days of Christmas” surged 9.2% from last year. The total cost for all of the items in the list has jumped $2000.00 to $23,439.38. While the cost of five golden rings rose by 30%, they seemed a bargain compared to the cost of three French hens, which increased by 233%.

Remember, if you plan to add to a Coverdell Education Savings account for 2010, the transaction must be completed by December 31st.. The maximum annual contribution is still $2,000.00 per year. Contributions to 529 College Savings Plans are considered gifts under the federal gift tax regulations and hence any contributions in excess of $13,000 ($65,000 if filing single over five years) or $26,000 ($130,000 if filing married jointly over a five-year period) per donor count against the one-time gift/estate tax exemption. The five-year period is known as the five-year carry-forward option: Once the single donor puts in $65,000 or the married jointly donor puts in $130,000, they are not able to make another contribution (gift) to that individual (without using part of their lifetime gifting exclusion) for five years.

If you’d like a second opinion on your investment or insurance objectives, or would like to develop a plan in the future, please don’t hesitate to contact me.

Happy Holidays

John H. Kaighn

Jersey Benefits Advisors

Staying the course

2010-11-15T08:00:00.008-05:00

On January 15, 2009, 90 seconds after lifting off from LaGuardia Airport, the now famous US Airways flight 1549 lost all engine power upon striking a flock of geese 3,200 feet above New York City. Three-and-a-half minutes later, the crippled Airbus A320 touched down in the Hudson River, and what could have been a major loss of life became a textbook lesson in crisis management.

Listening to the cockpit communications, it's quickly apparent that "The Miracle on the Hudson" was made possible by the skill, poise and careful coordination of Captain Chesley Sullenberger and First Officer Jeff Skiles. Yet the transcript also reveals the importance of a tool that for decades has helped pilots manage both the routine and unexpected during flight. That tool is the checklist.

Indeed, in the moments just before the bird-strike, Sullenberger is heard saying, "After takeoff checklist complete." Upon losing power, the first directive he gives Skiles is "Get the QRH." The QRH or Quick Reference Handbook, is a manual consisting largely of checklists to be utilized in troubleshooting various problems such as loss of cabin pressure or engine power. After the order is given, Skiles and Sullenberger can be heard working through a series of steps designed to save the flight.

As they attempted to address an emotionally fraught, seemingly impossible situation, the two pilots had a simple resource they could turn to for help. Beyond the aviation world, checklists are used to manage a host of complex processes: from constructing skyscrapers to administering critical care in hospitals.

Of course, the decisions investors make when markets become volatile don't have life or death consequences, but they can prove vital to ong-term financial wellbeing. And given what we know about
how market volatility can transform a calm, cool and collected investor into an emotional, panicked and scattered one,having a checklist to consult during the next period of instability might mean the difference between reaching your goals and falling short of them. The next time volatility strikes, consider these six steps:

1. Take your emotional temperature.

Even with the recent market tumult still visible in the rearview mirror, it may be difficult to recall just how unsettled investors felt in 2008 and early 2009. Yet it's all but assured that a future downturn will find us back in the same emotional boat. We shouldn't be surprised that when markets decline our moods tend to do the same, as losses can make us feel as if our financial objectives are imperiled. Yet even if we acknowledge that declines are a reality, we are still susceptible to letting the emotions that accompany those downturns drive decisions at odds with key investing goals. One way to help keep them at bay is to gain a deeper understanding of where they originate.

Consider, for example, the strong compulsion to sell when markets become erratic. At heart this urge is essentially a flight response, We seek to eliminate a source of anxiety - in this case, the possibility of monetary loss - by disengaging from it. On a practical level, that generally means converting assets into cash, which limits the possibility of loss.

Psychological studies and research in behavioral finance confirm that this aversion to loss is actually part of our neurological programming, hard-wired into us from a time when survival depended on hunting and foraging - and holding on to the fruit of those efforts meant the difference between life and death.

Viewed in that light, it's no surprise that the visceral urge to limit losses overtakes the rational part of our brain that may be telling us that selling assets into the teeth of a down market locks in losses and reduces considerably the potential to benefit from a market recovery.

Aversion to loss is but one of many tendencies that surface during volatile periods. Others include the impulse to move with the herd - a phenomenon exemplified by the late 1990s rush into tech stocks - as well as our penchant to heavily weigh the importance of recent events rather than considering them against the backdrop of market history.

According to behavioral economist Dan Ariely in his book, Predictably Irrational, it's important to understand the surprising power that emotions can exert over our choices. "Although there is nothing much we can do to get our Dr. Jekyll to fully appreciate the strength of our Mr. Hyde, perhaps just being aware that we are prone to making the wrong decisions when gripped by intense emotion may help us."

2. Turn down the volume.

When the market is rising like a rocket or sinking like a stone, the popular press seldom provides analysis that's useful to long-term investors. Instead the headlines tend to play up whatever information or trend has grabbed the momentary attention of traders and pundits. In an age of nonstop connectivity, tuning out financial news can be tough, but fixating on daily or even weekly market returns can spur us to actions that might ultimately impede our long- term success.

It's interesting to consider that the temptation to monitor stock and bond investments on a daily or even hourly basis stems mostly from the fact that there is always new data available, as trading creates regular re-pricing. To remain focused on long-term goals, it may be helpful to take the same approach with your investment portfolio that you do with assets that don't get re-priced with similar frequency. For example, short-term fluctuations in the value of your home or car don't prompt you to immediately put them up for sale.

Another strategy for curbing the emotional impact of market volatility is to review the value of your investments only at regularly scheduled times. Many investors elect to do so quarterly upon receiving account or brokerage statements. This diminishes the likelihood that they will feel it necessary to make constant changes in response to day-to-day market swings.

3. Find the broader context.

Ask the average investor how many 20% market declines they'd expect to experience over a 25-year period and chances are the answer will fall short of the number suggested by history. The figure, based on the unmanaged Dow Jones Industrial Average dating back to 1900, is about seven. That's right, roughly once every three-and-a-half years (assuming 50% recovery of lost value between declines), the Dow has lost at least one-fifth its value.

Yet each time such a downturn occurs, it understandably upsets investors. Moreover, the sharper drops often elicit claims that this time the selloff is different or worse than those that have come before. As previously noted, maintaining perspective while watching an account balance shrink is not easy. but remembering that downturns are a fairly normal occurrence can help place short-term market events in a broader historical context.

Having that historical perspective can strengthen your resolve to stay invested, which can be a key to long-term success. After all, pulling out of the market at a high point and buying back in at the boltom is almost impossible to do once, let alone more than a half dozen times during your life as an investor.

4. Recognize the potential harm of sudden movements.

A recent survey by financial research firm Dalbar determined that over the 20 yearsended December 31, 2009, the average stock investor's return trailed that of the broader market by nearly 5% per year. Put another way, if the market gained 10% annually, the average investor's portfolio realized only a 5% gain.

Much of this differential stems from investors who, for the reasons discussed previously, sold at the boltom of the market and, if they bought back in, did so once the market had already begun to recover. Market turnarounds often happen suddenly and unpredictably; being on the sidelines when a reversal occurs can rob investors of significant return.

In fact, a hypothetical investor in the unrnanaged Standard & Poor's 500 Composite Index who wasn't invested on the index's five best days during the lO-year period ended December 31, 2009, would have realized an annual return nearly 4% lower than someone who remained invested the entire time. Of course, past results are not predictive of results in future periods.

5. Think like a contrarian.

Warren Buffett once offered the following bit of investing advice: "When others are greedy, be fearful; when others are fearful, be greedy." A more delicate rephrasing might be: Amid adversity, there is often opportunity. Volatility of the kind that marked 2008 and early 2009 often punishes good and bad investments alike, as some investors succumb to the stress and opt out of the market entirely.

Though coetinuing to invest when markets are declining can be difficult, if you believe that stock and bond funds are a good way of meeting long-term financial objectives - which has been the case historically - then making purchases during a downturn is often like buying investments at prices below their longterm average. That's because as markets become less emotionally driven, stocks and bonds generally return to something closer to their long-term average, and investors who "bought on the dip" can benefit. While regular investing doesn't ensure you'll make money, staying the course through thick and thin can help increase your share balance, which can increase your portfolio's ability to provide income.

6. Check in with your financial adviser.

No one would set out on a Himalayan trek without enlisting a guide who knew how to navigate the most perilous stretches. So it goes with investing.

Your financial adviser can be a steadying presence when market conditions get tough. Whether reviewing your investment plan, providing perspective on what's happening in the market or placing current conditions in a larger context, your adviser is an important ally and sounding board. Maintaining open lines of communication can prevent you from taking steps that could undermine your long-term goals.

Indeed, you might think of an adviser as a kind of co-pilot. Much like Sullenberger and Skiles, you can manage the crisis more effectively together - by systematically working through your checklist with the goal of achieving a belter outcome.

The preceding article appeared in the Investor Magazine provided to shareholders of American Funds, a mutual fund company whose various funds are used by Jersey Benefits Advisors and John Kaighn to assist clients in meeting their investment objectives.

JERSEY BENEFITS ADVISORS NEWSLETTER FALL 2010

2010-10-06T08:26:00.001-04:00

MARKET WATCH

I don’t usually begin my missives with a quote from someone else, but I have to give kudos to Caroline Baum for this quote in her Opening Remarks article in the September 6, 2010 edition of Bloomberg’s Businessweek . She writes, “It’s easy to be nostalgic for the 1990-91 recession that gave way to the Clinton boom. What will it take to ignite that kind of growth again? The US economy remains almost comatose…. The current slump already ranks as the longest period of sustained weakness since the Great Depression…. Once in a lifetime dislocations will take years to work out. Among them: the job drought, the debt hangover, the defense-industry contraction, the banking collapse, the real estate depression, the health-care cost explosion and the runaway federal deficit.”

The portion of the quote in italics was included in Caroline’s article, but it was quoted from Time Magazine in September. However, the year of the quote was 1992, and shortly thereafter, the economy was off to the races for one of the best economic cycles in American history. While I am not predicting a 90’s type recovery, I believe you have to have a long term historical perspective when attempting to understand the cycles of the US economy, and be very wary of the media with their hysterical style of reporting.

While the 1990-91 recession could be considered mild in comparison to the 2007-09 recession, which by the way ended in June 2009 according to the NBER, many of the same problems we are experiencing today were concerns in 1992. Of course, the once in a lifetime dislocations didn’t take years to work out then, and also turned out not to be once in a lifetime dislocations. My point here is to be careful not to get caught up in the sensational, overly pessimistic and simplistic descriptions of our current state of affairs, and the equally inadequate prescriptions for corrective action espoused by various experts.

An article in Barrons quotes Stephen Roach, non executive chairman of Morgan Stanley Asia, on the solutions offered by both parties. He states," Also, the idea that we can come up with a quick fix is ludicrous. Politicians aren’t being honest. They’re saying, ‘Well if you just listen to what my party says, we can turn America around tomorrow.’ That’s a crock. And the American public has lost respect for what politicians are saying on both sides of the isle because these are deep seated problems that have been building over time and there’s no quick fix.” The idea of no quick fix sums it up, but it doesn’t mean unsolvable.

Thomas Donlan also writes in Barrons, “Medicare, Medicaid, Social Security, government retirement programs and military spending already consumed all the government’s $2.1 trillion in tax receipts for fiscal 2010. The rest of the official cost of government-including the spending to create and save jobs and the interest on the national debt-was borrowed.”

Budget cuts, changes in entitlement programs, tax increases and continued erosion in the value of the dollar (inflation) are on the horizon as the American public continues to wrestle with the questions of what do we really want in the way of entitlements, and what are we willing to pay for them.

Meanwhile, some help from the markets, like September’s best in 71 years performance can’t hurt! The DJIA is now up 3.45% for the year, the S&P 500, has posted a 2.45% increase for the year and the NASDAQ is up 4.38%.

THE POLITICAL AND THE ECONOMIC OUTLOOK

The mid term elections are rapidly approaching, and it seems the markets have priced in the prospects of Republican gains in the House of Representatives and possible control of that body. Since the market is always looking toward the future, don’t look for the actual election results to move the markets all that much. In the short term, the market’s prospects will be more focused on the earnings reports this month and the jobs report on Friday, October 8.

The overpromising by the Obama Administration that stimulus would save jobs has cost them their credibility. While it did lessen the effects of the recession, the stimulus hasn’t done much to help unemployment. This is because stimulus is a means of injecting government spending into the economy when it is weak, not a jobs program, per se. Employment only increases when the imbalances which caused the recession have been resolved.

As mentioned earlier, the recession’s official end was cited as June 2009. While many people feel we are still in the grip of recession, the facts don’t bear this out. We are in the recovery phase of the economic cycle, which means we are working our way back to the Gross Domestic Product level of the previous cycle. Because this recovery has been very weak, it is taking longer to reach GDP levels achieved prior to the recession, and it makes everyone impatient. The employment picture should begin to get better once we enter the expansion phase of the economic cycle, which will begin when we get back to the previous GDP levels of the last cycle. No one knows exactly when that will be, but it will be evidenced by lower unemployment numbers.

As we enter the last quarter of 2010, there may finally be a chance for a more pragmatic approach in Washington. It almost seems like we had to go through this exercise in idealism summed up in the quote “change we can believe in”, to reach the understanding politicians will say anything to get elected. The perception by the populace of a government moving so rapidly and unapologetically to the left, against the will of the majority, has led to a rebuke of big government ideas. While government is not the entire problem, it is also not the entire solution. I think if the administration fails to move more to the center, Obama will be a one term president.

At its last meeting, the Federal Reserve stated it stands ready to use Quantitative Easing, being called QE2, to further help the economy. This means the purchase of Treasury Securities in the open market, which will keep interest rates low, but could further erode the value of the dollar. This is a balancing act, and it can be positive for the markets. Rising stock markets mean better economic conditions, which can happen, if the government exhibits the fiscal discipline needed.

IF YOU ARE READY TO GO PAPERLESS READ ON

For those of you who have brokerage and retirement accounts through Pershing, there is a service called My Edocument Suite, which might interest you. It enables you to view account documents online, and is provided on behalf of Transamerica Financial Advisors, Inc. by Pershing LLC (member FINRA, NYSE, SIPC), a subsidiary of The Bank of New York Mellon Corporation.

On this secure website, you can request a user ID and password that will allow you to access your brokerage account statements, trade confirmations and other documents online. It also enables you to stop your paper statements and have notifications sent to your email when a new statement, confirmation or tax statement (1099) is available. All you need is your account number and a few minutes to answer some security questions. The link is http://www.myedocumentsuite.com . Call me for assistance.

Gold broke through the $1,300 per oz. level in late September. It belongs in your portfolio, but don’t put all of your eggs there!

DOLLAR COST AVERAGING THROUGH A SYSTEMATIC SAVINGS PLAN IS AN EXCELLENT WAY TO BUILD UP AN ACCOUNT WITHOUT A SIZEABLE INITIAL INVESTMENT. THIS IS THE WAY MANY COMPANY RETIREMENT PLANS FUNCTION. Saving a portion of our pay each month is very important. Company sponsored pension plans are one method to save and should be used for retirement. Other systematic investment accounts, SUCH AS ROTH IRA’S, TRADITIONAL IRA’S, COVERDELL ACCOUNTS, 529 PLANS, BROKERAGE ACCOUNTS AND ANNUITIES can be opened, some for as little as $50 per month, and debited directly from your checking or savings account. For more information, just call to set up an appointment. REFERRALS ARE ALWAYS WELCOME.

COMPANY INFORMATION:

Investment Advisory Services offered through:

Jersey Benefits Advisors

P.O. Box 1406

Ocean City, N.J. 08226

Phone: 609 827 0194

Fax: 609 861 9257

Email: kaighn@jerseybenefits.com

http://www.jerseybenefits.com/

Securities offered through:

Transamerica Financial Advisors, Inc.

A registered Broker/Dealer

34 Doe Dr.
Woodbine, NJ 08270
800-245-8250

Member FINRA & SIPC

Third Party Administration and Insurance Services offered through:

Jersey Benefits Group, Inc

P.O. Box 1406

Ocean City, N.J. 08226

Phone: 609 827 0194

Fax: 609 861 9257

Email: kaighn@jerseybenefits.com

Http://www.jerseybenefits.com/

All opinions expressed in this newsletter are solely those of John Kaighn & Jersey Benefits Advisors, formerly known as Kaighn Financial Services.

Recession Over?

2010-09-30T10:49:00.001-04:00

According to an announcement by the NBER the current recession ended in June 2009. This recession lasted from December 2007 through June 2009, a period of 18 months, making it the longest recession since World War II. This distinction earned it the moniker of The Great Recession in the media.

Since so many people are focused on the unemployment numbers, which are a lagging indicator of economic growth, a large segment of the population, according to various polls, still thinks the recession is ongoing and that a double dip is imminent. GDP numbers released today for the second quarter show the economy growing by 1.7%, and anemic growth is forecast for the current quarter as well. For those with a contrarian view, investing prudently now could pay off handsomely, when folks begin to believe this recovery is for real

John Kaighn

Jersey Benefits Advisors

Jersey Benefits Advisors Newsletter Summer 2010

2010-07-12T11:05:00.005-04:00

MARKET WATCH

The 4th of July holiday has come and gone as the mercury keeps rising incessantly, baking the East Coast in near record temperatures. I hope you were able to take advantage of the beautiful holiday weather and enjoy an outdoor activity or two. I was lucky enough to spend some time with my family at beach, and enjoyed my granddaughter as she frolicked in the sand and negotiated with the waves. She did quite well, until I managed to allow a rather small wave to splash up and hit her in the face. She didn’t like that very much! It reminded me of how I felt about the stock market’s performance prior to the holiday.

After a decent first quarter in 2010, some of the concerns we spoke about in the last quarter overwhelmed investors as the reality set in that this will not be a normal recovery, much as the recession we recently experienced was not typical. The countries of the European Union experienced their own debt crisis, with Greece being the poster child for fiscal mismanagement. Fear of a debt contagion from Europe undermined investor confidence and led to a major correction in the second quarter. The DJIA closed the quarter at 9,774.02, which leaves it at - 6.27% for the year. The Dow is now 12.8% lower than the April high, while the S&P 500 ended the quarter at 1,030.71 for a - 7.28% performance for the January to June period. The NASDAQ finished the quarter at 2,109.24 for a - 7.05% first half showing.

There are many debates raging about the significance of the second quarter drubbing. With the DJIA off 12.8% and the S&P 500 down over 15% from April, talk of the economy sinking back into recession, the dreaded double dip, has resurfaced. There is also much discussion about the American Recovery and Reinvestment Act of 2009. The huge stimulus bill hasn’t begun to create the jobs promised, as unemployment remains stubbornly high at 9.5% of the workforce. The major expansion of the government into healthcare, as well as the administration’s promise to push through a cap on carbon emissions, in their response to the BP fiasco in the Gulf of Mexico, has left many Americans wary of the Big Government goals of this Congress. In fact it has led Barron’s, in July 5th issue, to call for major losses for the Democrats in November, and an end of the Big Government agenda.

While the effectiveness of government stimulus will be debated ad infinitum, the fact of the matter is something had to be done to stabilize the economy. The promise of it being a “job creation machine for shovel ready projects” created unrealistic expectations. As can be witnessed by this tepid expansion, stimulating an economy as multifaceted as ours is no small endeavor. It takes a great deal of time for the effects of government spending to be felt, and when it is targeted to technologies which are the pet projects of politicians, the effects can be minimal, and can have some unintended consequences.

So, if in fact Barron’s is correct and we wind up with a stalemate in Congress after November and the inability to push through Cap and Trade legislation, we may actually be better off. While the search for alternative and renewable fuels is certainly in our best interest as a country, to deny the role of fossil fuels in our immediate and long term future is tantamount to utter deception. As for the double dip recession, with all of the stimulus thrown at the economy, it seems unlikely. We will probably continue to expand slowly, but unemployment will likely remain uncomfortably high.

ARE YOU TAKING ADVANTAGE OF THIS BUYING OPPORTUNITY?

It seems like the markets have been on a wild, rollercoaster ride lately. Even portfolios with state of the art diversification have gyrated significantly over the last two years. I realize it gets difficult to stay the course, when there is so much opinion and information bombarding you on a daily basis. Yet, more than ever, I believe these volatile times present a wonderful opportunity to systematically add to your portfolio. It is really not enough to just hold onto your investments, because it is equally important to continually purchase shares to take advantage of lower prices when they become available. This trading range will not last forever, and there will be a point when the markets recognize the expansion is for real, and the buying opportunity will be gone.

PRIVACY POLICY & FINANCIAL REFORM

PRIVACY POLICY

At Jersey Benefits Advisors and Jersey Benefits Group, Inc. protecting your privacy is very important to us. We want you to understand what information we collect and how we use it. We collect and use information from you on applications and other forms as well as information about financial transactions with us and from non-affiliated third parties. This “nonpublic personal information” is obtained in connection with providing a financial product or service to you.

We do not disclose any nonpublic personal information about you without your express consent, except as permitted by law. We may disclose the nonpublic personal information we collect to persons or companies that perform services on our behalf.

We restrict access to your nonpublic personal information and only allow disclosures to persons and companies as permitted by law to assist in providing products or services to you.

We maintain physical, electronic and procedural safeguards to protect your nonpublic personal information at all times.

FINANCIAL REFORM

Legislation may be signed into law this summer, billed as reform of the financial system, to prevent a calamity similar to the 2008 financial crisis. Unfortunately, there is no provision in the legislation about what to do with Fannie Mae and Freddie Mac, the two entities many feel are at the root of the housing crash. While consumer protection is a worthwhile goal and regulations are certainly important in order to reign in those who are corrupt, this particular bill is too little, too late, and fails to recognize the government’s complicit role in the housing bubble. Enjoy your summer!

COMPANY INFORMATION:

Investment Advisory Services offered through:
Jersey Benefits Advisors
P.O. Box 1406
Ocean City, N.J. 08226
Phone: 609 827 0194
Fax: 609 861 9257
Email: kaighn@jerseybenefits.com
Http://www.jerseybenefits.com

Securities offered through:
Transamerica Financial Advisors, Inc.
A registered Broker/Dealer
34 Doe Dr.
Woodbine, NJ 0870
800-245-8250
Member FINRA & SIPC

Third Party Administration and Insurance Services offered through:
Jersey Benefits Group, Inc
P.O. Box 1406
Ocean City, N.J. 08226
Phone: 609 827 0194
Fax: 609 861 9257
Email: kaighn@jerseybenefits.com
Http://www.jerseybenefits.com/

All opinions expressed in this newsletter are solely those of John Kaighn & Jersey Benefits Advisors, formerly known as Kaighn Financial Services.

Investing Your Money Wisely

2010-06-15T17:12:00.002-04:00

If you are involved in business then chances are you are so caught up with your day to day operations that you sometimes forget that there are ways for your money to make even more money for you. In many instances, you will actually earn more from your investments than from your actual business. This is because you have to deal with overhead expenses, salary, and other operations with your business. On the other hand, all these factors are not present with your investments. In other words, you are making your money work for you when you invest rather than the other way around.

So how exactly can you go about this endeavor? The fact is, investments require exposure to the financial markets, so you would need to determine where to invest your money. There are many investment options from which to choose. 401k Plans, IRA's, Simplified Employee Pensions and the SIMPLE Plan are a few ways you can funnel cash from your business into an investment account. Asset Management Accounts, Annuities and Life Insurance are other methods you can use to gain some tax advantages while putting your money to work.

While investing in the market can yield a higher rate of return for your money, there are also risks, so you should have a long term investment horizon. Some ways to invest include investing in the stock market, bonds, mutual funds, ETF's and money market funds. Diversification is one key to success while investing. This means having your money spread over many asset classes so your risks are balanced in different industries and sectors of the economy. Using diversification/asset allocation as part of your investment strategy neither assures nor guarantees better performance and cannot protect against losses in a declining market. Another key to investing wisely is to dollar cost average into your investments, so you don't drop a large amount of money into a particular asset all at once. Dollar cost averaging is simply investing smaller amounts of money on a monthly or quarterly basis into your selected funds, in order to make purchases at various prices, instead of one large purchase. Dollar cost averaging/systematic investment does not ensure a profit or guarantee against a loss. Investors should consider their financial ability to continue their purchases through periods of low price levels.

Investing is a good way to earn while enjoying the convenience of being in control of your time and your money. Investments also can provide you with a sense of security if you know that your money is managed by a competent financial advisor. Choosing an investment advisor is a highly personal endeavor, but with all of the options and choices available, having someone with which to discuss your investments and provide advice is extremely important. Advisors can work fee based or commission based and can even charge on an hourly basis, depending on the needs of the client. No matter whether you choose to go it alone or work with an advisor, investments certainly give you plenty of flexibility because you are free to choose the investment medium that best suits your needs.

John Kaighn

Jersey Benefits Advisors

Open Letter to Governor Christie

2010-05-19T10:05:00.002-04:00

Governor Christie,

I have been following the steps you have been taking in regard to the Pension System and Health Benefits, as well as your other steps to bring some sensibility to our state's finances. Just so you know, I am a 57 y/o male from Cape May County who voted FOR YOU, even though I am registered as an independent. I am also an educator in Middle Twp. and a Registered Investment Advisor in the State of NJ as well as a Registered Representative of Transamerica Financial Advisors, Inc. I have worked in both the public and private sector for my entire career, so I hope you take the time to read what I say here, because I think I have an understanding of the issue.

Educators are not your nemesis, and some of the ideas in the recently enacted legislation are not only palatable, but should have had the support of NJEA in 2006 when they were originally drafted by a Democratic Legislature, the chosen party of NJEA. This legislation is an acceptable compromise, because it is directed at new employees and will be the basis for bringing the pension system in line with that of the private sector. However, when you talk about how much teachers or other public employees have contributed to the pension plan, and how much of a benefit they reap upon retirement, you should also remember that some teachers, who are still working, went into education when the starting salary was $7,000.00 or less. The money contributed to the pension plan is supposed to go into an investment fund which is supposed to be PRUDENTLY invested. With the time value of money invested over a 30 - 40 year career, the actual dollar amount each individual teacher contributed to the plan is NOT the only money they have in the plan, as it is SUPPOSED to grow. I KNOW you understand this, so it is a bit of demagoguery to ask if it is fair for people to collect more than they contributed. I do agree there are some municipalities where individuals have gamed the system. Perhaps you should publically NAME a few of them.

I think you will find most educators don't want to pay for health benefits, because they feel it was a promise made to them by the state, and is considered by many to be compensation for services rendered. It is also true that NJEA’s position is that the union doesn't want to give up anything it has previously negotiated. However, with the current fiscal situation in this state, it is a bit like the position the United Auto Workers took with GM, so I think It is time for the name calling, whining and public bickering to end and for you to start negotiations with the union at the state level, and not ask individual districts to take pay freezes or act unilaterally. This is an extremely divisive tactic and will be seen for what it is, which is an attempt to break the union. If you spell out how much a 1.5% contribution equals, since many people don't actually do the math, it may be an easier sell. After all, $900 a year on a $60,000 salary is a reasonable compromise.

If you begin to educate, and not scapegoat people, you may start to get teachers to understand that the current system is unsustainable and must change. If you provide detailed analysis and realistic comparison of salary, benefits and pension as a total compensation package between the public sector and the private sector, I think people would understand that compensation in the public sector has begun to eclipse the compensation levels in the private sector. While many will argue this is a matter of the choices made by individuals, rational people will realize compromise must be made. After all, the public sector is funded by those paying taxes from the private sector, so the two systems MUST be in balance.

It is difficult to compare jobs in the public sector to jobs in the private sector, especially when you consider many employees in the private sector rely on a 401k or similar plan to fund their retirement. This equates to 10% - 15% of compensation being put into a retirement fund. If an employee managed to save $500,000 for retirement, took a retirement salary of $50,000 per year, and could continue to gain 8% on that investment while retired, the account would be DEPLETED in less than 20 years. Hence the private sector angst at the public sector’s lifetime pensions.

In my particular school district, we receive $55 per day for our unused sick leave when we retire. I have not abused my sick leave and yet my compensation upon retirement for sick time would be less than $10,000. Most school districts have similar limits on payments upon retirement for sick time. I do understand there are some municipalities where some public employees have outrageous compensation for sick time. This has to stop and I agree.

In this time of angry politics, it might be a good idea for you to not try to find scapegoats as you attempt to get this state’s fiscal house in order. There are actually some people who voted for you who are members of NJEA and would like to see the union be less beholding to the Democratic Party. Toning down the rhetoric, sitting down and actually talking respectfully to the professionals you’d like to make compromises might actually work.

Finally, you should look at dismantling the entire educational assessment juggernaut that has been created in this state. I have watched this bureaucracy grow over the years from one test at the end of 8th grade to the behemoth it is today. There are commercially available tests that would yield results that can be tracked year after year, without the cost of actually recreating the wheel. Perhaps this might be one very good act of privatization that could save quite a few dollars immediately.

I do hope you can help bring some semblance of fiscal responsibility back to this state, but as you know, any time you have to make cuts there is going to be pain. I don't envy you in your position. Just remember every cut has an impact on jobs, so wholesale cutting can be dangerous. Attrition, hiring freezes and eliminating much of the political patronage in this state would help a GREAT deal. Making certain employees scapegoats or demons is counterproductive and demoralizing. Pitting the private sector against the public sector is irresponsible and reprehensible.

Sincerely,
John Kaighn
Middle Twp. School District
Jersey Benefits Advisors

Jersey Benefits Advisors Newsletter Spring 2010

2010-04-07T19:24:00.001-04:00

MARKET WATCH

The stock market indices have behaved in a much more modest fashion in the 1st quarter of 2010, prompting many to doubt the economic recovery which is blossoming all around us. At this juncture, many investors and much of the news media are focused on the unemployment numbers and the slowness of job growth. Yet retail sales figures, temporary hiring and manufacturing are ticking upward, while consumer spending rose in February for the fifth straight month, jumping by 3.4% from a year earlier.

Of course there are many concerns facing the US as a country, such as unemployment, paying for the healthcare legislation recently enacted this year, the moribund housing sector, Social Security, Iraq, Afghanistan, Iran, oil prices, terrorism and of course the dreaded double dip recession. All of these issues are definitely a drag on the national psyche as the extreme positions on the Right and Left scream for attention. As all of this plays out on the national stage, an interesting phenomenon is happening in the markets.

Thankfully, the major issues confronting usare being managed in a way the stock market indices, which are reflections of you and I, seem to appreciate. The fact of the matter is that the almost 75% gain in the S&P 500 over the last year has helped ease the concerns of financial collapse. While there are some analysts and pundits concerned the market has moved too fast, the proper context for the increase in the S&P 500 since last March, according to Michael Santoli of Barrons, is the index “has merely recouped 57% of the bear market losses, reattaining a level first reached in 1998 and still below where the market collapsed after Lehman Brothers failed.

As Mike O’Rourke of brokerage BTIG has noted, on Monday, September 29, 2008, as the first TARP vote failed in Congress, the S&P 500 fell to 1106 from a Friday close of 1213. So this leg of the rally to 1178 since hitting 1100 near Thanksgiving has merely recouped three-quarters of what was lost in a single, sickening day”. Do you remember how gut-wrenching that day was?

So, a subdued but very decent quarter has just ended with the Dow Jones IndustrialAverage gaining 4.10%, closing at 10,856.63 and recently climbing above 11,000. The S&P 500 ended the quarter at 1,169.43 which was a 4.87% increase. The NASDAQ finished the quarter at 2,397.96 scratching out a 5.68% gain. The performance was not spectacular, but three more quarters at half that rate would generate above average returns for the year.

It amazes me how the various state governments manage to forget to plan for the economic fallout of recessions. Since our economy is cyclical and the public sector relies on revenue from taxes to fund its operations, it would seem a prudent move would be to reign in expenditures when the private sector begins to contract. When the private sector sheds millions of jobs and the unemployment rate jumps from 4% to 10%, you would think governors, state legislatures and public employee unions would realize there might be a few less tax dollars rolling into the coffers of the local, state and federal governments. Unfortunately, the public sector just doesn’t seem to get it. With state budgets facing huge deficits, the public sector will be forced to shed jobs, which will definitely add to the ranks of the unemployed. This is an unfortunate fact of life and a lesson we seem to be destined to relearn each recession. No sector is immune to a recession’s wrath.

STRATEGIES FOR DIVERSIFYING ASSETS

There has been a great deal of press in recent years given to portfolio diversification, in particular to the use of hedging strategies with alternative investments. Many times hedge funds are referred to as the vehicles to use for this type of strategy, because they are not linked to traditional investments, such as stocks and bonds. However, on a closer inspection, it becomes evident that many hedge funds, even though they use sophisticated tools such as derivatives, controlling purchases in companies, merger arbitrage and venture capital, are still very much connected to traditional investments, and also remain illiquid, expensive and prone to risk.

Are these investments suitable for your portfolio? The answer depends on your appetite for risk, tolerance for illiquidity and overall investment goals. In the past, hedge funds were marketed to very high net worth individuals, but recently, this unregulated asset class has been marketed to a larger group of investors, in order to increase market performance during times of low returns.

Many hedge funds have had lackluster performance recently, and this can lead managers to increase the risk, in order to increase the return for the year. Accurate data has only been collected on hedge funds for about 12 years. This doesn't give much information on which to " base an analysis, so you need to exercise caution in interpreting such results", according to Vikas Agarwal, of the J. Mack Robinson College of Business at Georgia State University.

During the last decade, there was a rotation out of technology into real estate, energy, natural resources, commodities, bonds and emerging markets, which created asset bubbles and culminated in the financial collapse of 2008-09. In my opinion, the idea is not to switch asset classes and try to time these rotations, but rather to attempt to build a portfolio, which holds positions in all of these asset classes and more. This requires a great deal of discipline, because it means holding and purchasing positions, which may be out of favor, at the same time you are building positions in sectors, which are in favor. This is why I recommend adding to your portfolio through dollar cost averaging, and monitoring performance on a calendar year basis.

Much of the same diversification hedge funds claim they can provide can be attained through the careful construction of a portfolio using sector mutual funds and Exchange Traded Funds. It can also be done without the cost structure of a hedge fund, which generally charges a fee of 2% of assets, plus a 20% incentive fee on the profits for the year. If you’d like information on ways to hedge your portfolio, feel free to call for an appointment.

CONSOLIDATED STATEMENT & GMIB REMINDERS

I just wanted to remind you that consolidated statements for clients will be provided on a semiannual basis after the market results on June 30th and December 31st. All clients will still receive statements from the various mutual fund companies, insurance companies or Pershing. If you would like to discuss your consolidated portfolio value, or receive a consolidated statement after March 31st or September 30th, just give me a call. We can set up an appointment, or I can send you the statement by email or regular mail.

Clients with Transamerica or MetLife annuities should look for the Guaranteed Minimum Income Benefit, Managed Annuity Program, Family Income Protector or Retirement Income Choice Riders to compare market value to guaranteed value. Call me with your questions.

COMPANY INFORMATION:

Investment Advisory Services offered through:
Jersey Benefits Advisors
P.O. Box 1406
Ocean City, N.J. 08226
Phone: 609 827 0194
Fax: 609 861 9257
Email: kaighn@jerseybenefits.com
Http://www.jerseybenefits.com

Securities offered through:
Transamerica Financial Advisors, Inc.
A registered Broker/Dealer
570 Carillon Parkway
St. Petersburg, FL 33758-9053
800-245-8250
Member FINRA & SIPC

Third Party Administration and Insurance Services offered through:
Jersey Benefits Group, Inc
P.O. Box 1406
Ocean City, N.J. 08226
Phone: 609 827 0194
Fax: 609 861 9257
Email: kaighn@jerseybenefits.com
Http://www.jerseybenefits.com/

All opinions expressed in this newsletter are solely those of John Kaighn & Jersey Benefits Advisors, formerly known as Kaighn Financial Services.

What Is Investing?

2010-03-24T09:52:00.000-04:00

The concept of investment is actually quite simple: investing means putting your money to work for you. Basically speaking, investing is another way to think about how to make money. Growing up, most of us were taught that you can earn an income only by getting a job and working, and that's exactly what most of us do. There is nothing wrong with this way of thinking, but in order to make more money, we'd have to work more hours. However, there is a limit to the number of hours that can be worked in a day, not to mention the fact that having a great deal of money is no fun if we don't have the leisure time to enjoy it.

You can't clone yourself to increase your working time, so instead, you need to have an extension of yourself - your money - working for you. That way, while you are putting in hours for your employer, working in the garden, sleeping, reading the paper or socializing with friends, your investments can be earning you money. Quite simply, making your money work for you maximizes your earning potential whether or not you receive a raise, decide to work overtime or look for a higher-paying job.

There are many different ways you can go about making an investment. This includes putting money into a money market, stocks, bonds, mutual funds, annuities, ETF's, real estate or starting your own business. Sometimes people refer to these options as "investment vehicles," which is just another way of saying "a way to invest". Each of these vehicles has various pros and cons, depending on who you talk to, but it doesn't matter so much which method you choose for investing your money, the idea is to have your money working for you so it creates wealth. Even though this is a simple idea, it's the most important concept about investing.

What Investing Is Not:

Investing is not gambling. Gambling is putting money at risk by betting on an uncertain outcome with the hope that you might win money. Part of the confusion between investing and gambling, however, may come from the way some people use investment vehicles. For example, it could be argued that buying a stock based on a "hot tip" you heard at the water cooler is essentially the same as placing a bet at a casino.

True investing doesn't happen without some action on your part. An investor does not simply throw his or her money at any random investment; he or she performs thorough analysis and commits capital only when there is a reasonable expectation of profit. Yes, there still are risks, and there are no guarantees, but investing is more than simply hoping Lady Luck is on your side.

Why Bother Investing?

Obviously, everybody wants more money. It's pretty easy to understand that people invest because they want to increase their personal freedom, sense of security and ability to afford the things they want in life. However, investing is becoming more of a necessity. The days when everyone worked the same job for 30 years and then retired to a nice fat pension are gone. For average people, investing is not just a helpful tool, but rather the only way to afford to retire and maintain their present lifestyle.

Whether you live in the U.S., Canada, or pretty much any other country in the industrialized Western World, governments are tightening their belts. Almost without exception, the responsibility of planning for retirement is shifting away from the state and towards the individual. There is much debate about how safe our old-age pension programs will be over the next 20, 30 and 50 years. But why leave it to chance? By planning ahead you can ensure financial stability during your retirement. (For more, see Jersey Benefits Group, Inc.)

John Kaighn

Jersey Benefits Advisors

John Kaighn's Guidance Website

Using Systematic Payouts for Income

2010-02-21T09:00:00.000-05:00

While there is no “one size fits all” model which can be used to determine the savings necessary for the retirement years, there are some benchmarks and rates of return, which are realistic measures for making projections. Most of us don’t want to see our standard of living and quality of life deteriorate during our retirement years, so retirement income needs to be close to working income, especially if travel or vacation homes are included in those retirement dreams. However, most defined benefit plans have a payout ranging from 40% - 80% of working income, with most being closer to the lower end of the range. Many companies have stopped using defined benefit plans all together, opting to utilize defined contribution plans, such as the 401k, SIMPLE or SEP.

So what is a realistic rate of return and retirement asset goal? Let’s look at the rate of return first. Prudent advisors and investors realize long term averages have to be considered in making projections, and 8% has been the rule of thumb used for calculating investment rate of return. This is based on long term bond performance. The historical return for the stock market has been closer to 10%. How much do you need for a comfortable retirement? That is a personal question for each retiree, but I’ll run through a couple of scenarios to show how systematic payouts from your investments can help stretch out your income. A systematic payout is basically reverse dollar cost averaging. It means taking withdrawals of retirement income on a monthly basis, the same way the money was saved prior to retirement. The type of investment vehicle could be a rollover IRA, which receives defined contribution balances after retirement, or when changing jobs.

If you have saved $750,000 by the tme you are ready to retire, and draw 10%, or $75,000 annually, and you earn a rate of return equal to 8% annually, the money will last 18 years. The same $750,000 in the Growth Fund of America, using the returns of the last ten years, which include the bear market’s losses, and gaining only 8% thereafter, would last 25 years. If a client placed the $750,000 in one of the newer annuities, with the Guaranteed Minimum Income Benefit, and draws 6% a year, which is $45,000, and the GMIB return is 6% a year, the balance will never fall below $750,000. Therefore, the client’s heirs would get the $750,000 as a death benefit and possiby more, if the market returned more than the 6% GMIB.

While there are concerns about the solvency of Social Security, my feeling is the government will keep the social pact it has made with the workers of this country, and maintain some form of retirement benefits for its citizens, even if the age of retirement is extended and benefits are not as generous as today.

John H. Kaighn

Jersey Benefits Advisors

Middle Twp. Middle School Guidance Department

Jersey Benefits Advisors Newsletter Winter 2010

2010-01-05T11:33:00.000-05:00

MARKET WATCH

My wife and I had the opportunity to visit New York City with some friends for her birthday on December 29th. That evening we strolled through Times Square, right past the unmarked, unlicensed, white cargo van that had been parked there for several days and was removed from the street the next day. It was searched for explosives, but none were found, however, the NASDAQ and other buildings in the area were evacuated. For the second time in a week, my attention was once again focused on terrorism. In fact, had it not been for the incompetence of the nut case with the bomb in his underwear, Christmas Eve could have been a night of tragedy for this country.

While sitting in the lounge at the Marriott Marquis in the Times Square area, our conversation turned to the multitude of high rise office buildings and the numerous businesses located in this section of the city. The history of this vibrant economic engine confronts you at every corner. The activity in the area gives one an appreciation for the scope of the economy of NYC, and helps me fathom the enormity of the 14 trillion dollar economy of our country, which many times seems quite esoteric.

We have been through a difficult recession and unemployment is still at an uncomfortable level, but as bad as 10% unemployment sounds, the reality is that 9 out of 10 workers have jobs. As an investment advisor, I read numerous publications and constantly scan data. I condense it into this newsletter to help you make decisions about your investments in order to attain your goals. Information constantly flows from the media, and much of it is spun by extremists on the right and left to advance their agenda. While I am not always correct, I try to be objective and show both sides of the issues facing us.

An interesting year has just concluded for the markets, as the financial panic that began in 2008 reached its nadir in March of 2009. Since then, the markets have recovered dramatically signaling the end of the recession and posting some significant gains for the year. In fact, the DJIA gained 18.82% for the year and closed at 10,428.05 while the S&P 500 improved to 1,115.10 which is an increase of 23.45%. Meanwhile, the NASDAQ rose to 2,269.15 adding 43.89%. While these percentage gains are significant, it is important to keep things in perspective.
In order for the indices to reach their former all time highs, the DJIA must still add 35.83% to get to 14,164.53 and the S&P 500 must improve to 1,565.15 which is another 40.35% gain. The NASDAQ, which bubbled into the stratosphere in 2000, must still reach 5,048.62 which is an increase of 122%.

While these statistics seem a bit depressing at first glance, it is safe to say that none of us invested all of our assets in the markets in October 2007, when the DJIA and S&P 500 reached these levels. While the value of our assets are lower than their highest value during the previous bull market, most of us have made money on our investments over the years. If you were investing through the entire recession, then you are poised to reap some pleasant rewards during the next bull market, which is unfolding now.

Remember, somewhere out there is a hapless soul who sold his investments in March, at the height of the panic, and went to cash. Now he is trying to decide if this rally is for real. Luckily, it is none of us! There will be some ups and downs going forward, and problems still exist, but the growth machine that is the US economy is unstoppable if we don’t constrain it.

ECONOMIC OUTLOOK FOR 2010

Of course, this turn of the page of the calendar also has us entering a new decade, which many times seems like a new chapter in an interesting book. There are many soothsayers out there trying to convince you they “know” what is going to happen this decade, and frankly I have read forecasts that are all over the map. My purpose here is to focus on where we are now and what we can expect in the short term, drawing on opinions depicting best and worst case scenarios.

As I mentioned earlier, the recession has not “officially” been declared over by the National Bureau of Economic Research, but the 2.2% growth in the third quarter is an indicator that the economy is growing again, albeit by economic stimulus. Of course, there are predictions of everything from a double dip recession to fourth quarter GDP increasing by 4.5% and annual GDP growth of 3.5% in 2010. According to a survey of 58 economists by Bloomberg, done in December, the US economy is “expected to muddle along at the 2.6% average annual growth rate of the past 20 years, that consumer prices will rise by 2.1% and that joblessness will remain at 10% for the year”.

Within that particular survey, the economists were divided into two distinct and extreme groups as to their view of the direction of the economy. One group adhered to the belief that the recovery will follow historical norms, with pent up demand generating a burst of growth. The other group believes things will be different this time as people will shy away from shopping and banks will be tight fisted with credit. While the “this time it is different crowd” was debunked in in the previous decade on dotcom profits, different paradigms, demographics, housing and decoupling of economies, there have also been recessions in the past where the recovery was not prolific or “V shaped”. It seems like the consensus view of muddling through may indeed be what happens.

Another area where opinions diverge drastically are on government intervention and stimulus. Had the government done nothing, the ensuing panic may have been even worse than what we saw from October 2008 to March 2009. So, now the focus is on an exit strategy.

There is reluctance to withdraw the stimulus too soon for fear of choking off a recovery. However, the more stimulus in the system, the higher probability of inflation. Many economists see little risk of inflation with unemployment at 10%, but politicians are already sweating the 2010 midterm elections. Current legislative initiatives will be costly, and all of us will have to pay more in taxes. Higher taxation stifles growth. Without growth, unemployment increases. Let’s hope Bernanke has the will to remove the punch bowl in time.

ROTH IRA CONVERSION RULES FOR 2010

In 2010, the income limit of $100,000.00 for ROTH IRA conversions will be eliminated, making it possible for anyone with an IRA to convert to a ROTH IRA. There are many factors to consider when making a decision about whether or not to convert your IRA to a ROTH IRA, but the overriding factor is taxation. If you convert in 2010, you must pay 100% of the tax by the date of final tax filing, which is October 14, 2011. Or, you can defer the tax due and pay half in 2011 & half in 2012. You also have until the final tax filing date to recharacterize or undue the conversion if your account value drops, and the tax would be lower by reconverting in 2011. However, then the total tax due would be 100% in that year. Give me a call for more information to see if it makes sense for you.

COMPANY INFORMATION:

Investment Advisory Services offered through:
Jersey Benefits Advisors
P.O. Box 1406
Ocean City, N.J. 08226
Phone: 609 827 0194
Fax: 609 861 9257
Email: kaighn@jerseybenefits.com
Http://www.jerseybenefits.com

Securities offered through:
Transamerica Financial Advisors, Inc.
A registered Broker/Dealer
570 Carillon Parkway
St. Petersburg, FL 33758-9053
800-245-8250
Member FINRA & SIPC

Third Party Administration and Insurance Services offered through:
Jersey Benefits Group, Inc
P.O. Box 1406
Ocean City, N.J. 08226
Phone: 609 827 0194
Fax: 609 861 9257
Email: kaighn@jerseybenefits.com
Http://www.jerseybenefits.com/

All opinions expressed in this newsletter are solely those of John Kaighn & Jersey Benefits Advisors, formerly known as Kaighn Financial Services.

Education Department to Demand School Pay Data

2009-11-22T08:02:00.001-05:00

By Stephen Sawchuk

U.S. Department of Education officials plan to require districts receiving economic-stimulus aid to report school-level salaries—a sign, observers say, that the Obama administration might seek key changes to district accounting procedures for federal Title I funds.

The reporting—the first collection of its type undertaken by the federal government—could give a clearer picture about the extent to which district spending on salaries differs between schools that receive Title I dollars for disadvantaged students and those that do not.

The results of the data collection, which is to take place this winter, are likely to give more ammunition to school finance experts and lawmakers who maintain that the Elementary and Secondary Education Act should be changed to require districts to address such disparities before receiving the federal aid.

Because a majority of districts’ costs are tied up in salaries, the data have implications for the way teachers of different levels of pay and experience are distributed across districts.

“We’ve never had a moment before when public officials have asked questions about these inequities,” said Marguerite J. Roza, a research associate professor at the University of Washington, in Seattle, who has studied the issue extensively. “Many districts swear that they don’t have them. But they haven’t looked.”
Teacher Distribution

A little-noticed provision in the American Recovery and Reinvestment Act requires each district receiving Title I funds under the stimulus law to file with its state a school-by-school listing of per-pupil expenditures by December 2009.

Aside from a brief notice in the Federal Register, the Education Department has been silent about what information it would seek from districts to fulfill the requirement. But according to forms filed by the department with the White House Office of Management and Budget over the past two months, the Education Department indicated that it plans to require districts to report information on wages, including:
Total salaries in each school;

• Salaries of instructional staff (such as paraprofessionals) only;

• Salaries of teachers only; and

• Nonpersonnel expenditures, if available.

The department would also request more detailed information from five states yet to be chosen. Those states would be asked to break down the expenditure information by state, local, and federal funding sources, including Title I, the documents indicate.

The heavy emphasis on teachers’ salaries stands in direct contrast to the way that districts currently account for them under the Title I program, which provides additional money to districts with high concentrations of poor students.

To receive the federal funding, districts must meet three financial requirements meant to prevent them from using the extra federal dollars to fill in gaps in state and local funding. Under the “comparability” provisions, districts must show that they provide equitable state and local resources to low- and high-poverty schools before receiving their Title I allocations.

But the current version of the ESEA allows districts to exclude salary differentials from the calculation. Instead, they can allocate money to schools based on the district’s average teacher pay as set out in the districtwide salary schedule.

Researchers such as Ms. Roza have found significant funding disparities between low- and high-poverty schools in the same district, largely as a result of differences in teacher salaries. She contends that the omission of salaries from the comparability language papers over factors, such as transfer rules in contracts and high turnover in low-income schools, that tend to lead to a concentration of lower-paid novice teachers in those schools.

In their documentation to the OMB, department officials wrote that the findings from the data collection could be used to help policymakers craft changes to the comparability provisions in the ESEA.

“This is the only way to truly measure whether resources around teacher salaries, curriculum, and technology are being equitably distributed to schools and classrooms,” said Charles Barone, the director of federal policy for Democrats for Education Reform, a New York City-based political action committee. “Districtwide figures obscure resource differences, which is the key reason why most districts refuse to publish school-by-school dollar figures.”

Raegen Miller, a senior policy analyst at the Center for American Progress, a Washington think tank headed by a former Clinton White House official, praised the department’s efforts in the five states that would be chosen for the more detailed reporting, saying such scrutiny could intensify the focus on putting performance at the center of school policy.

“A lot of people think that some amount of budgetary discretion should reside in the hands of principals, that there should be some more flexibility about how teachers are compensated,” he said. “That depends on knowing how much money is flowing to the schools and whether outcomes are measured.”

But the documents show that state officials approached about the collection have expressed concerns about the burden and cost, as well as its feasibility.

“We also understand that districts may not have comprehensive data on school-level expenditures that they can report for a previous school year, but we believe that, at a minimum, they should be able to identify which staff were assigned to each school and to determine the salary expenditures for each school staff member,” Sandra Abrevaya, a spokeswoman for the Education Department, said in an e-mail.
Closing ‘Loopholes’

Although the Obama administration has not made any public statements about the comparability language, several experts on the issue now work in the administration.

A former Center for American Progress analyst, Robert Gordon, and Russlynn Ali, a former vice president of the Education Trust West, an advocacy group, work, respectively, at the OMB and in the Education Department’s office for civil rights. Both pressed for changes to the Title I comparability provisions in their prior roles.

Such changes could, for instance, require districts to account for actual, rather than average, teacher salaries in determining whether state and local funds are distributed comparably to Title I schools.

Any such alterations would require congressional approval, and that could well be difficult.

When the House Education and Labor Committee, in 2007, issued a discussion draft of a bill to reauthorize the ESEA—currently the No Child Left Behind Act—that proposed accounting for actual teacher salaries, comparability became a surprise hot-button issue. ("Draft Proposal Seeks to Equalize School Resources," Sept. 19, 2007.)

Teachers’ unions opposed the proposal, fearing it would cause districts to try to override contracts and transfer teachers forcibly to equalize salaries.

The National Conference of State Legislatures and the American Association of School Administrators argued that the change would interfere with state funding formulas and district budget flexibility.

But Ms. Roza contends that closing the comparability “loophole” would not necessarily require transferring teachers. Districts couldmake up for lower teacher salaries in high-poverty schools, she says, by spending more to hire instructional coaches for those schools, creating incentives for teachers to move to them, or reducing class sizes.

Neither the American Federation of Teachers nor the National Education Association returned requests seeking comment on the new data collection.

For their part, lawmakers are not likely to take up comparability before turning their attention again to the ESEA, which is overdue for reauthorization. But they still have their sights set on the provision.

“I think you have to [make changes],” said Rep. George Miller, D-Calif., the chairman of the Education and Labor Committee, when asked about comparability following a recent hearing on ensuring equitable access to teachers.

“We assume that there is equal funding across the district so that these [Title I] dollars go to schools impacted by heavy concentrations of poor and minority students,” he continued. “But if those resources are siphoned off, that purpose of federal law is not being met.”

Education Week
Vol. 29, Issue 12, Pages 15,17

JERSEY BENEFITS ADVISORS FALL 2009 NEWSLETTER

2009-10-21T06:42:00.000-04:00

MARKET WATCH

What a difference a year makes! Heading into October 2008 we were watching in horror as the banking system teetered on the abyss. Portfolios withered in ways no Monte Carlo projection could depict. Panic was gripping the markets, and our leaders allowed politics to drive them to devastating lows.

Fast forward to October 2009, and while there are the usual remarks about this being a bad month for the markets, the recovery to date has been stellar. The Dow Jones Industrial Average gained 15% to close the quarter at 9,712.28 and posted its best quarter since 1998, as well as its best third quarter since 1939. While the actual lows for this cycle in the Dow were attained on March 9, 2009, it has roared back since then, sensing economic rebound, and recovered 48%. Although the Dow is still 31% lower than the all time high it reached in October 2007, it has posted an 11% gain year to date.

The overall market turned in strong gains, as evidenced by the 15% jump in the Standard and Poor’s 500 index for the third quarter. The S&P 500 is up 17% year to date and has recovered 56% from the March lows. It still remains 32% lower than its October 2007 high.

Interestingly and not unexpectedly, the markets have retrenched a bit early in October, and will probably provide some unpleasant experiences going forward. Markets never provide straight line growth, especially after such a tumultuous period. Look for volatility to increase as the forces of recovery battle the forces of an economic backslide. Eventually the inevitable recovery will manifest itself, and the indices will be within striking distance of their all time highs once again. In order to take advantage of this fact, investors should be committing assets to their portfolios now.

There are many factors to be considered as we head into the final quarter of this year. Interest rates, taxes, health care, foreclosures, inflation, deflation, regulation, Social Security and energy are all issues commanding our attention. How they are handled in the next few years is paramount to our well being. The markets will react accordingly.

ECONOMIC OUTLOOK

On September 30, the Bureau of Economic Analysis released its third revision of the estimate of Gross Domestic Product for the second quarter. The estimate of - 0.7% indicates the economy remained in recession at least through June 30, 2009. As I noted in previous newsletters, the two longest recessions, since the Great Depression, were the recessions of 1973-75 & 1981-82. Each of those recessions lasted 16 months. The current recession is officially 19 months and the longest since the depression. The third quarter has shown signs of economic recovery, and it is possible we may see a return to growth when the BEA releases statistics on the current period.

Many economists and Fed Chairman Bernanke echo the belief that the economy has turned positive in the third quarter, and the stock markets certainly have ratified it. There are arguments supporting this belief, as well as one’s dismissing the projections of the beginning of a new economic cycle. As I have mentioned before, the introduction of a trillion dollars of stimulus into the economy will definitely return us to growth, and will more than likely have some very positive consequences, as well as some unintended negative consequences. Our economy is changing and when this happens old industries falter as new ones develop. Creative destruction can’t be stopped.

529 QUALIFIED TUITION PLANS

Saving money for college expenses is a goal I hear many young parents express, and one of the best ways to build tax-advantaged savings for college is the 529 plan. A 529 plan is a tax advantaged savings plan designed to encourage saving for future college costs. 529 plans, legally known as “qualified tuition plans,” are sponsored by states, state agencies, or educational institutions and are authorized by Section 529 of the Internal Revenue Code.

Changes in the tax code were made in 2006 making permanent the provision that earnings in a 529 plan are tax free upon withdrawal when used for education expenses. This has resulted in eliminating any change in status for earnings for the 529 plan and made it the premier savings vehicle for college savers.

There are two types of 529 plans: pre-paid tuition plans and college savings plans. All fifty states and the District of Columbia sponsor at least one type of 529 plan. In addition, a group of private colleges and universities sponsor a pre-paid tuition plan. There are differences between pre-paid tuition plans and college savings plans, and each individual family needs to determine which plan may be right for their needs.

Pre-paid tuition plans generally allow college savers to purchase units or credits at participating colleges and universities for future tuition and, in some cases, room and board. Most prepaid tuition plans are sponsored by state governments and have residency requirements. Many state governments guarantee investments in pre-paid tuition plans that they sponsor.

College savings plans generally permit a college saver (also called the “account holder”) to establish an account for a student (the “beneficiary”) for the purpose of paying the beneficiary’s eligible college expenses. An account holder may typically choose among several investment options for his or her contributions, which the college savings plan invests on behalf of the account holder. Investment options often include stock mutual funds, bond mutual funds, and money market funds, as well as, age-based portfolios that automatically shift toward more conservative investments as the beneficiary gets closer to college age. Withdrawals from college savings plans can generally be used at any college or university. Investments in college savings plans that invest in mutual funds are not guaranteed by state governments and are not federally insured.

If you are a parent or grand parent and wish to learn more about this option as a means to save for college, please don’t hesitate to contact me for more information. As with any type of investment, the longer time frame you have to invest, the better chance you have to achieve your goals. There is no time like the present to get started!

TFA & ISI MERGER COMPLETED & REFERRALS ARE ALWAYS WELCOMED

The successful merger of Transamerica Financial Advisors and Intersecurities resulted in only a few technical difficulties for me. Some clients received confirmations with Intersecurities as the B/D, and some accounts were charged a fee for systematic investments, which will be reimbursed. Overall, I have to offer kudos to our back office for the meticulous completion of the merger. I look forward to providing enhanced services to you and your family through our state of the art broker/dealer. If the advisor of any of your friends or relatives has left the business, or if any of your other investment representatives have been absent during the recent market turmoil, please feel free to make a referral. Your confidence in me is greatly appreciated, as I monitor and protect your assets.

COMPANY INFORMATION:

Investment Advisory Services offered through:
Jersey Benefits Advisors
P.O. Box 1406
Ocean City, N.J. 08226
Phone: 609 827 0194
Fax: 609 861 9257
Email: kaighn@jerseybenefits.com
http://jerseybenefits.com

Securities offered through:
Transamerica Financial Advisors, Inc.
A registered Broker/Dealer
570 Carillon Parkway
St. Petersburg, FL 33758-9053
800-245-8250
Member FINRA & SIPC

Third Party Administration and Insurance Services offered through:
Jersey Benefits Group, Inc
P.O. Box 1406
Ocean City, N.J. 08226
Phone: 609 827 0194
Fax: 609 861 9257
Email: kaighn@jerseybenefits.com
Http://www.jerseybenefits.com/

All opinions expressed in this newsletter are solely those of John Kaighn & Jersey Benefits Advisors, formerly known as Kaighn Financial Services.

Education Department Unveils Investing In Innovation Fund Criteria.

2009-10-07T13:48:00.002-04:00

Here is a reprint from the Associated Press giving some information on how stimulus dollars are being spent. Although most of the $5 billion of stimulus money is targeted for the states, at least $650 million will be going directly to schools to try to improve the quality of education in this country.

WASHINGTON (AP) -- School districts and nonprofit partners can benefit from a $650 million competitive grant fund for school reforms pushed by President Barack Obama.

The money is part of the economic stimulus law, which gave Obama $5 billion to help overhaul schools. Most of the money is for states, but $650 million will go directly to school districts or schools in partnership with colleges, philanthropies, nonprofit companies that turn around failing schools or other nonprofit groups.

The idea is to provide seed money for fresh ideas and for smaller programs that need help to expand.

''This is an unprecedented investment in cutting-edge ideas,'' Education Secretary Arne Duncan said.

Duncan issued rules for the competition Tuesday. The Education Department plans to publish a final application early next year, accept proposals in the spring and award the money by Sept. 30, 2010.

In August, Duncan said Teach for America and programs like it could benefit from the competition. Begun in 1990, the nonprofit recruits recent college graduates to teach in schools in poor communities for at least two years. The group sent an unprecedented 4,100 recruits into the classroom this fall.

Duncan also talked about charter schools, which are taxpayer-funded schools that operate independently of local school boards. Obama wants to expand the number of charter schools, which are an estimated 4,100 of the country's nearly 100,000 public schools.

Duncan said the biggest grants from the $650 million ''Investing in Innovation'' fund will go to programs that have been proven to work. Grants for those programs could reach $50 million.

Programs that need money to expand or build a research base could get grants of up to $30 million, and promising ideas worth trying could get grants of up to $5 million, he said.

Obama announced the rules for the $5 billion state grant competition in July, and that money should be awarded early next year.

John Kaighn

Jersey Benefits Advisors

The Kaighn Report

Nation's Teachers Unions Feel Squeezed by Some Former Allies

2009-09-24T08:57:00.000-04:00

Unions continue to be battered by the Democrats, and still they stand 100% in lock step behind their candidates... go figure!! Read on.

By Rob Hotakainen
rhotakainen@mcclatchydc.com
Published: Monday, Sep. 21, 2009 - 7:05 am | Page 16A
Last Modified: Monday, Sep. 21, 2009 - 7:53 am

WASHINGTON – When Gov. Arnold Schwarzenegger proposed merit pay for teachers and lifting the cap on charter schools, the head of the California NAACP stood by his side.

And when the Los Angeles school board voted to approve a plan that could turn over a third of its schools to private operators, Latino members and Mayor Antonio Villaraigosa led the charge.

The nation's public school teachers are feeling the squeeze from all sides these days, and some of the heat is coming from unlikely sources: minorities and longtime Democratic allies.

One of them is President Barack Obama, who is irking teachers by suggesting that student test scores be used to judge the success of educators.

The pressure is particularly intense in California, where U.S. Education Secretary Arne Duncan says the state has "lost its way" with public schools.

In an attempt to improve them, the Obama administration is threatening to withhold federal stimulus money if the Golden State does not rescind a state law that prevents the state from tying test scores to teacher performance.

None of this is exactly what teachers had in mind when they knocked on doors to help elect Obama.

"It takes more than the ability to fill in bubbles to be considered an educated person," Marty Hittelman, president of the California Federation of Teachers, said in a letter to Duncan. "We thought President Obama understood that."

As the battles intensify, longtime political alliances are shifting, said Jaime Regalado, executive director of the Edmund G. "Pat" Brown Institute, a nonprofit public policy center at California State University, Los Angeles.

"They're in flux. There's no question about that," he said, adding that "teacher unions feel somewhat chagrined" with what they're hearing from Washington.

David Sanchez, president of the 340,000-member California Teachers Association, said teachers had high hopes for Obama but that so far there has been little change.

Indeed, when it comes to education policies, he said it's hard to distinguish Obama from his predecessor, President George W. Bush, who placed a premium on high-stakes student testing.

"To be perfectly honest, it's disappointing again," Sanchez said. "Our perception is it's more of the same, and that's not good, because we thought we were going to be able to change something, make some true reform in public education."

Ironically, the teacher unions find themselves opposing some of their former members.

Alice Huffman, the NAACP's president since 1999, helped lead fights against school vouchers and merit pay when she worked as an organizer for the CTA for 13 years. Her thinking has definitely changed, which is why she was standing next to a Republican governor last month.

"The only place the NAACP can be is with this governor," Huffman said. "If the teacher unions put a better proposal on the table, we would stand with them."

For Huffman, the battle is personal. She said too many inner-city minority children are stuck in failing schools and that immediate and revolutionary changes are needed.

"I have watched this for 20 years," Huffman said. "And I have nieces and nephews that have come out of the public schools that can't read, can't write, will never be employable. This is happening right here. … Something profound has to happen. We can't wait another decade and another decade while people tweak with it."

In Los Angeles, Villaraigosa turned against the local teachers union to help push a school-choice plan that was approved last month. It will allow private operators to submit plans on how they'd run 250 schools, including many that failed to meet federal benchmarks on state tests. United Teachers Los Angeles, Villaraigosa's former employer, is opposed to the plan, saying it's the first step toward privatizing the school district.

In Sacramento, state legislators will soon meet in a special session to consider Schwarzenegger's "Race to the Top" plan. Among other things, it would allow merit pay and more charter schools while permitting the state to use test scores to evaluate teacher performance.

John Kaighn

Jersey Benefits Advisors

The Kaighn Report

Obama Speech To Students Revisited

2009-09-09T08:56:00.003-04:00

The controversy eminating from various corners of the country in regard to Obama's speech to schoolchildren abated dramatically when the text of the speech was released and former First Lady, Laura Bush, gave her support to the initiative. Of course the fear was that the speech would be some sort of indoctrination into left wing politics, when in fact it was just a use of the presidential bully pulpit to encourage students to do their best in school. Freedom of speech allows everyone in this country, including the extremists on the left and the right to speak their minds and be heard. Below are some quotes from various news agencies regarding the speech.

A plethora of news outlets covered President Obama's speech to schoolchildren, which took place at "Wakefield High School just outside Washington" on Tuesday. Most coverage was positive in nature, with some sources emphasizing students' reactions to the speech. The New York Times (9/9, Dillon) reports, "Millions of American schoolchildren, oblivious to the uproar that preceded a back-to-school speech by President Obama, heard him exhort them to greatness on Tuesday, watching, applauding and in some classrooms cheering a nationally broadcast address that urged them to set high goals, knuckle down in their studies and persevere through failure."

Education Week (9/9, Klein) reports, "In a speech that triggered advance controversy -- and logistical headaches for school officials -- President Barack Obama...urged America's K-12 students to study hard and stay in school, saying, 'What you make of your education will decide nothing less than the future of this country.'" The President's remarks "capped days of criticism, primarily from" his "conservative opponents...who asserted that Mr. Obama might use the address" and corresponding lesson plans from the U.S. Department of Education "to persuade children to support his political agenda."

The AP (9/9, Matheson, Rohr) reports that "for all the hubbub among adults over the back-to-school speech, many youngsters" nationwide "took the president's message to heart." After listening "closely to Obama's story of studying with his mother at 4:30 a.m.," William Geist, "a San Francisco fifth-grader who likes to sleep late," said, "Now since I heard this speech, I'm like, 'Man, I've got to get up early in the morning. I've got to get ready for school. I've got to do this.'"

The Miami Herald (9/9, Sampson, McGrory) reports that "kids interviewed by The Miami Herald called the speech inspiring and seemed incredulous that the 15-minute talk had sparked such outrage nationally." Pines Middle School seventh-grader Chanelle Missick, for instance, said, "I don't see what's wrong with him coming and talking to the kids, trying to give them responsibility and direct them in the right way." Meanwhile, 12-year-old Pines student Carlton Campbell "said he was encouraged when Obama talked about his own struggles. 'He really inspires me," said Carlton, 12. 'Because I was failing last year.'"

The Salt Lake Tribune (9/9, Stewart, Tribune) reports that "Utah students who watched the televised speech in class called it 'inspiring' and 'real.' Still, "some admitted to zoning out and others dismissed it as 'a political stunt.'" Nevertheless, the Salt Lake Tribune adds, after the speech was aired, "all the uproar over Obama using classrooms to push socialism or a hidden policy agenda seemed overblown." The Washington Post (9/9, 2:29 PM, Chandler, et al.) reports that in his speech, Obama "described his own upbringing, noting that he 'got in more trouble than I should have' as a youth. He told the students, 'There is no excuse for not trying. No one has written your destiny for you, because here in America you write your own destiny.'" Jack D. Dale, superintendent of Fairfax County Public Schools, called the speech "phenomenally good," noting that it focused on "the positive aspects of kids taking ownership of their education."

Tonight we get to hear all about the health care initiative. While it is true most Americans don't want the government involved too much in the free enterprise system, it is also unfair to characterize every undertaking of the government as folly. Perhaps some cooler heads will prevail and we will see some health insurance reform, no public option and mandatory health insurance for everyone, much as we have with auto insurance. Then the government could possibly look at some public/private initiatives which would revive the pure research models, such as Bell Labs and the Xerox program at Palo Alto, which we had when we first attempted to land on the moon. Of course, that would mean that the CEO's and other top management types would have to plow some of the cash from our leading corporations into research and development, instead of their pockets. I guess one could dream a little, huh?

John Kaighn

Jersey Benefits Advisors

The Kaighn Report

JERSEY BENEFITS ADVISORS INVESTOR NEWSLETTER SUMMER 2009

2009-07-17T09:57:00.003-04:00

MARKET WATCH

As we close the books on the first half of 2009, there appears to be a cup half empty, cup half full scenario going on, depending on your point of view. The markets closed mixed with the S&P 500 winding up at 919.32, a 1.8% gain for the year and up 35.9% from the low of 676.53 in March. The DJIA finished at 8,447.00, which is still -3.8% below the beginning of the year, but still 29% above the low of 6,547.05 set in March. The Nasdaq posted the best year to date gain of the major indices when it closed at 1,835.04, which is a 16.4% increase for the first half of 2009.

While these gains from the lows in March indicate a fantastic recovery for the markets, they represent only a portion of the returns necessary to restore the indices to their former highs. For example, the DJIA would have to gain 67.7% to get to it’s former all time high of 14,164.53 and the S&P 500 would have to add 70.3% to reach it’s former high of 1,565.15. Of course the NASDAQ, which went to the moon in 2000, would have to increase a whopping 175.1% in order to reach the heights it attained before the dotcom bubble burst. While these numbers are troubling, they speak volumes about percentages and compounding. The sad fact is that it takes a 100% gain to recover a 50% loss, or put another way: if you start with 100 dollars, and lose 50%, you have 50 dollars. It will take a 100% gain to return the 50 dollars to the original 100 dollars. Isn’t math just so unfair!

The point here is not to make you feel despondent, but rather to help keep things in perspective. Yes, this was a great quarter and perhaps this recession could be over or at least in its final stages, but there are a great deal of challenges ahead of us. After having witnessed the near implosion of the world’s financial system, the creative destruction of the auto industry in the US, and a tanking of the stock market to levels not seen since the mid 1990’s, looking for positive signs makes sense. If you’ve been investing through all of this turmoil, it is like you had the opportunity to go back to 1997 and put in new money. These gains are real and will continue to positively impact your portfolio going forward.

REFERRALS AND THE MERGER OF TFA & ISI

Has the advisor of any of your friends or relatives left the business, or have any of your other investment representatives been absent during the recent market turmoil?

Do you feel as if your representative only wants to talk to you when all is well with the world? I am here to talk to you about the state of the market, the performance of your investment portfolio, and your retirement plans, regardless of what the market is doing.

With the merger of Transamerica and Intersecurities, I look forward to continuing to provide you with quality investment products and individualized service.

Please feel free to refer any of your friends or relatives who may looking for a new advisor to me. Thank you!

ECONOMIC OUTLOOK

As I mentioned on the preceding page, there is some evidence, as well as historical precedent to indicate the recession may be over or in the fourth quarter, to use a sports analogy. As I noted in previous newsletters, the two longest recessions, since the Great Depression, were the recessions of 1973-75 & 1981-82. Each of those recessions lasted 16 months. March of 2009 was the 16th month of the current recession. As I’ve mentioned before, there are always numerous opinions on these matters, but it is more than likely no coincidence the markets, which are leading indicators, began recovering in March.

While I’d like to believe this is not a head fake, but rather a real recovery, I’ve read enough opinions by numerous bears to remain reticent. This doesn’t mean not being invested, but rather it means cautious, disciplined investing. With the government running GM, TARP funds in the financial sector, Korea and Iran defiantly rebuking Obama’s olive branch, Congress salivating over health care and over a trillion dollars of stimulus in the system, a lot could go wrong. Inflation is one evil that comes to mind.

Obama says he doesn’t want to run GM or the health care system. The specter of public housing conjures up horrendous images of what public health care would look like.

PRIVACY POLICY, MERGER UPDATE & INSURANCE

PRIVACY POLICY

At Jersey Benefits Advisors and Jersey Benefits Group, Inc. protecting your privacy is very important to us. We want you to understand what information we collect and how we use it. We collect and use information from you on applications and other forms as well as information about financial transactions with us and from non-affiliated third parties. This “nonpublic personal information” is obtained in connection with providing a financial product or service to you.

We do not disclose any nonpublic personal information about you without your express consent, except as permitted by law. We may disclose the nonpublic personal information we collect to persons or companies that perform services on our behalf.
We restrict access to your nonpublic personal information and only allow disclosures to persons and companies as permitted by law to assist in providing products or services to you.

We maintain physical, electronic and procedural safeguards to protect your nonpublic personal information at all times.

MORE ON THE MERGER

Transamerica Financial Advisors, Inc. is excited to share some important news with you. Pending final regulatory approval, Transamerica Financial Advisors will merge its operations with St. Petersburg, Florida based InterSecurities, Inc., an affiliated firm that has been offering financial services for almost 25 years. We anticipate the merger will take effect in September 2009. As part of the merger, the resulting entity will retain the Transamerica Financial Advisors, Inc name and continue to be a full service, independent broker-dealer and registered investment advisor. Most importantly, the relationship you have with your registered representative or investment advisory representative WILL NOT change.

INSURANCE SERVICES

Have you reviewed your insurance policies lately. Whether it comes to insurance on your life, health or investments, the need for insurance is something that should not be overlooked. Changes in status, such as a marriage or the birth of a child are times when insurance levels may need to be adjusted. Also, during times of peak earnings and peak responsibilities, a look at the protection you are providing to your family, in the event of an untimely death, is an unpleasant, but necessary task. Just as the insurance on retirement income, provided by annuities as part of an investment strategy paid off during this downturn, planning with life insurance helps your family when an unanticipated death occurs.

John H. Kaighn

Jersey Benefits Group, Inc.

Coverdell Education Savings Accounts

2009-06-25T07:56:00.000-04:00

For parents who are interested in saving money for their children's education, the Coverdell Education Savings Account (ESA) is an account which was created as an incentive for that purpose. The total contributions for each beneficiary of this account can't exceed $2,000 in any year, no matter how many accounts have been established. A beneficiary is someone who is under age 18 or is a special needs beneficiary and will receive the funds for educational purposes.

Any funds which are contributed to a Coverdell ESA are not tax deductible, however, money invested in the account will grow tax free until a distribution is taken. The beneficiary on the account will not owe any taxes on those distributions if they are less than a beneficiary’s qualified education expenses at an eligible institution. This benefit applies to post secondary, higher education expenses as well as to elementary and secondary education expenses.

Here are some things to remember about distributions from Coverdell Accounts:

Distributions are tax-free as long as they are used for qualified education expenses, such as tuition, books and fees

There is no tax on distributions if they are for an eligible educational institution. This includes any public, private or religious school that provides elementary or secondary education as determined under state law, and any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the Department of Education. It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) post secondary institutions.

The Hope and lifetime learning credits can be claimed in the same year the beneficiary takes a tax-free distribution from a Coverdell ESA, as long as the same expenses are not used for both benefits

If the distribution exceeds education expenses, a portion will be taxable to the beneficiary and will be subject to an additional 10% tax. Exceptions to the additional 10% tax include the death or disability of the beneficiary or if the beneficiary receives a qualified scholarship

There are contribution limits for taxpayers based on the taxpayer’s Modified Adjusted Gross Income. Contributions to a Coverdell ESA may be made until the due date of the contributor’s return, without extensions.

If there is a balance in the Coverdell ESA at the time the beneficiary reaches age 30, it must be distributed within 30 days. A portion representing earnings on the account will be taxable and subject to the additional 10% tax. The beneficiary may avoid these taxes by rolling over the full balance to another Coverdell ESA for another family member.

For more information, see IRS Publication 970, Tax Benefits for Higher Education, available at IRS.gov or by calling 800-TAX-FORM (800-829-3676)

John Kaighn

Jersey Benefits Advisors

The Kaighn Report

Taxing Health Care as Income

2009-05-19T10:05:00.002-04:00

So you thought the new administration was really for middle-class tax cuts? There is no way a government can run the financial services industry, the automobile industry and the health care industry, without raising taxes on EVERYONE. Here is an example of what's in the works:

Unions target Wyden in anti-tax push
By Reid Wilson
Posted: 05/19/09 07:01 AM [ET]

Union groups are targeting one of their close allies in Congress over a controversial proposal to tax employee healthcare benefits.

In a coordinated campaign using radio advertising, mail and other pressure mechanisms, three top unions are urging Oregonians to voice their displeasure to Sen. Ron Wyden (D-Ore.), whose proposal may be stalled in the Senate.
The radio ads, purchased by the National Education Association, the American Federation of State, County and Municipal Employees (AFSCME) and the United Food and Commercial Workers, take Wyden to task for his Healthy Americans Act, a bill that would provide universal coverage while removing the tax exemption employers get when they provide health benefits to their employees.

"Taxing health benefits? That doesn’t make sense," the ad's narrator says. "Tell Sen. Wyden that Oregon families want quality, affordable healthcare — not taxes on their healthcare benefits."

The three major unions are running the radio ad in Wyden's backyard in the Portland and Eugene markets, to the tune of $60,000, according to those familiar with the expenditure. AFSCME is undertaking a larger pressure campaign utilizing phones, mail, canvassers and a website.

Top Oregon labor leaders took to a prominent liberal website last week to question Wyden's plan, which they compared to proposals by Sen. John McCain (R-Ariz.) during the 2008 presidential election.

Wyden's bill is far different from the proposal McCain offered last year. Wyden would add a standard deduction estimated at $17,000 for a family of four, according to estimates by the Oregon Democrat's office. More expensive plans would be subject to taxes.

The proposal would make employers' share of health premiums taxable. Unions largely stand to gain from maintaining the status quo.
Last week, Senate Finance Committee Chairman Max Baucus (D-Mont.) said he would not consider Wyden's proposal. But Baucus did release a list of priorities that unions are unlikely to be pleased by. A broadside aimed at Wyden could serve as a warning to Baucus.

Wyden "has been a champion of healthcare reform, and his work to reform the system and to encourage public options for health care coverage could change the face of our health care system, expand coverage, and make health more affordable for all Americans. But only if our Senior Senator stops lobbying for a health care benefits tax," wrote Oregon AFSCME executive director Ken Allen and Oregon AFL-CIO president Tom Chamberlain on the BlueOregon blog.

President Obama opposed the proposal during the campaign, but in March Obama's budget director, Peter Orszag, said the idea should not be taken off the table.

Finding himself on the opposite side of labor is not a normal position for Wyden. Ordinarily a strong backer of labor, Wyden voted labor's way on 94 percent of the scored votes in 2007, the last year for which the AFL-CIO has scored members of Congress. In his career in Congress, Wyden has voted with labor 88 percent of the time.

JERSEY BENEFITS ADVISORS INVESTOR NEWSLETTER SPRING 2009

2009-04-21T19:44:00.002-04:00

MARKET WATCH

The recession unleashed its fury on us during the first quarter of 2009 and drove the markets down to levels not seen since 1997. It does get tough to stay the course with your investments during trying times like we are experiencing. Yet it is exactly the determined and disciplined investor who will fare the best, when the markets begin their recovery.

I feel it is my responsibility at this juncture to attempt to assuage client concerns, while at the same time acknowledging the very real challenges we all face in the midst of declining real estate values and investment wealth. The reason why every asset class and almost every hedge seems to have failed is because we had a systemic failure in the financial system. To keep things in perspective, it is important to note that these types of systemic failures have happened before and will happen again, despite the government’s best efforts to curb them.

As I have said all along, the current recession is not and will not become a calamity of the proportion which was experienced during the 1930’s, even though the media and a rookie President intimated catastrophic consequences if the stimulus bill was not enacted with all its pork barrel legislation. Notice how the rhetoric has abated substantially since President Obama has gotten his way.

However, this is a very deep and substantial recession, and at the end of the first quarter its duration has been 16 months, which is as long as the downturns of 1973-74 and 1981-82. While every recession is different, its conclusion won’t be known until after the fact. When job losses begin to ebb, there is a good possibility the recession will already be over, because job losses usually continue for several months after the economy begins to recover.

So how long can we expect this misery to continue? Economists in the latest Wall Street Journal forecasting survey expect the recession to end in September, though most say it won't be until the second half of 2010 that the economy recovers enough to bring down unemployment. While this is only a prediction, it indicates this is a very deep recession, as if you didn’t already know it.

With that in mind, it would make sense there is a rather large window for investors to take advantage of this downturn. The market should continue to be volatile and could still revisit the lows set in March of 2009. An investor who has been dollar cost averaging all through this recession has seen the overall value of his assets drop considerably, but each new purchase is being made at a 30% to 40% discount. If the recession lasts until September of this year, that is almost two years of discount shares being purchased. When things finally pick up, the increased number of shares which have been purchased will help account values increase more rapidly than if no shares had been purchased during the recession.

I caution everyone not to make large timing purchases, because in times like these, it is very difficult to determine the best time to add a large sum of money to your account. This is why I stated earlier the disciplined, dollar cost averaging investor will reap the highest rewards when the markets turn upward.

The DJIA ended the first quarter down 13.3%, the NASDAQ was down 3.1% and the S&P 500 closed down 11.7%. When the market closed for Easter, the DJIA increased 6.3% since 3/31.

UNDERSTANDING AND PROFITING FROM HISTORY

Now that it is generally accepted that we are not reliving the Great Depression, but are experiencing a difficult recession, the search for someone to blame has intensified. While Bernie Madoff is the poster boy for bad behavior, there is plenty of blame to go around from Wall Street to Main Street. I don’t see assigning blame as my role, since my main impetus is to understand what is actually happening and how to profit from it going forward.

Prior to the Great Depression, any time there was a financial calamity that caused the economy to contract, it was referred to as a depression. After the Great Depression, because the term depression conjured up such dire circumstances, the term recession was coined to refer to a contraction in the economy of less than 10%. The term depression is still used to define a drop in GDP of more than 10%.

According to the most recent Wall Street Journal forecasting survey, gross domestic product (GDP) was predicted to contract in the first and second quarters of this year by 5.0% and 1.8%, respectively, on a seasonally adjusted annualized rate. A return to growth, a modest 0.4%, isn't expected until the third quarter. In the fourth quarter of 2008, the most recent period for which data is available, the economy contracted 6.3%. Also, with all of the social safety net programs in place, such as unemployment insurance, FDIC insurance, food stamps and the huge government stimulus program, conditions for those who are unemployed are much less dire than during the Great Depression.

So we have talked about dollar cost averaging into your investments as a way to profit during this downturn, but it does take a certain amount of intestinal fortitude to continue to invest, when so many people are worried about the sky falling. This contrarian view is very important, because as Warren Buffett stated several months ago, the time for fear is when everyone is being greedy and the time to be greedy is when everyone else is fearful. I think you could say fear has permeated the investment landscape at this point!

Finally, you have to take into account the experience level of the journalists who are reporting 24/7 about this recession. Most of them were not even working during the 1973-74 recession, so their frame of reference is very limited. Even the 1981-82 recession is like a history lesson to many of them. Many people thought America’s best days were behind us back then. That opinion certainly turned out to be false. The point is that after recessions come recoveries. Government spending, whether for social programs such as the New Deal or military programs, like under Reagan, ignited growth. The two best five year runs for the market began in 1938 and 1982. Time to be greedy?

STATEMENTS AND THE GUARANTEED MINIMUM INCOME BENEFIT

Some of you who have invested in the Transamerica and MetLife Annuities have expressed some difficulty finding the Guaranteed Minimum Income Benefit information on your statement. Depending when your purchase was made, the rider may have different names. On the Transamerica product, the value appears on the second or third page and is called the Family Income Protector, Minimum Income Base, or Managed Annuity Program. On the MetLife product, it is called the GMIB or GMIB Plus and is on the first page. Since the market has been so volatile, and account values are already higher than they were at the end of the quarter, I am not sending consolidated statements. Anyone who would like to receive a consolidated statement should give me a call and I’ll send it to you.

COMPANY INFORMATION:

Investment Advisory Services offered through:
Jersey Benefits Advisors
P.O. Box 1406
Ocean City, N.J. 08226
Phone: 609 827 0194
Fax: 609 861 9257
Email: kaighn@jerseybenefits.com

Securities offered through:
Transamerica Financial Advisors, Inc.
A registered Broker/Dealer
1150 S. Olive St. Suite T-25
Los Angeles, CA 90015
800-245-8250
Member FINRA & SIPC

Third Party Administration and Insurance Services offered through:
Jersey Benefits Group, Inc
P.O. Box 1406
Ocean City, N.J. 08226
Phone: 609 827 0194
Fax: 609 861 9257
Email: kaighn@jerseybenefits.com

All opinions expressed in this newsletter are solely those of John Kaighn & Jersey Benefits Advisors, formerly known as Kaighn Financial Services.

Chase and Other Big Banks Fraudulently Devalue Homes

2009-04-09T18:50:00.002-04:00

While the banks are reaping billions of dollars in taxpayer funded relief, not only do they continue to make credit tight and foreclose on mortgage holders, but they have now begun to unilaterally adjust home values on mortgage holders who didn't over extend themselves during the housing boom. The audacity of banks, with Chase Bank being one of the largest banks perpetrating this fraud, is just unforgivable. In essence, they are marking to market the property values of homeowners who are not delinquent, not in danger of foreclosure and good paying customers. Furthermore, the values they are assigning to properties are no more based on reality than the values of the toxic assets they hold on their books.

I happen to be one of the people who didn't overreach during the housing boom, didn't use all of the credit line Chase Bank provided and paid my bills every month on time. Still, Chase decided to arbitrarily lower the value of my home on their website to $200,000, a value 40% lower than its assessed value and thereby wiping out, on paper only, most of the equity in my home. They did this even though I have no intention of selling my home and never asked for an increase in my home equity line of credit. I am sure they did this because the line has an adjustable rate of interest which currently is 2.49%. Obviously, they don't like the fact that I am getting a bit of a break on my interest payments at this time. The kicker is that their website specifically states that the values listed for homes are NOT APPRAISALS and "The tool on this page is provided by a third-party site. Please note that the third party's privacy policy and security practices may differ from Chase's standards. Chase assumes no responsibility for nor does it control, endorse or guarantee any aspect of your use of this tool." Yet, they have used this very tool to value my home.

I checked other sites, including Zillow and found the value of my property to range from a low of $279,000 to a high of 375,000. Even on the Chase site, my neighbors property was listed $61,000 higher than my property. While my neighbor has a very nice property and he was very recently approved for a refinancing which exceeds the value Chase assigned to his home, my house is bigger, has more bedrooms, more bathrooms and other features my neighbor doesn't have. My property was also freshly painted this spring and is in excellent condition. The whole point is that Chase arbitrarily deflated the value of MY PROPERTY to force me to beg them for a fixed rate loan.

When I called their customer service line, they were rude and disrespectful. After my third call, I was given the phone number of the corporate office where supposedly I would be able to talk to someone who actually was involved in the decision making process. As you can imagine, I got to talk to a very nice secretary who told me everyone was busy, but someone would return my call. Of course, nobody returned my call.

So now I have a question for you, Jamie Dimon. Is this the way you build customer loyalty? Is this how you envision using taxpayer dollars, MY DOLLARS, to help homeowners. You can rest assured I have already contacted my lawyer and have begun the appraisal process on my property, because you have hurt me financially, degraded the value of other properties in my neighborhood and fraudulently blocked my line of credit, which is the least of my concerns and the only thing you have the legal authority to do.

So fellow taxpayers, is there anyone else who has had a similar experience. Anyone else who thought they were doing the right thing by paying your bills on time, only to get SCREWED by your multinational, too big to fail bank? Please feel free to comment on this rant and perhaps we can join together to sue this and other culprits who have destroyed the value of our investment portfolios, while paying fat bonuses to the very fools who caused this credit crisis.

John H. Kaighn

Jersey Benefits Advisors

The Kaighn Report

Brokerage Account Features

2009-03-12T07:50:00.000-04:00

Many people have accounts with different mutual fund companies, and receive numerous statements, which can be a burden. One way to lessen paperwork is to consolidate assets into a brokerage account. Most major brokerage firms offer a brokerage account, which they may also call an Asset Management Account. Below are some of the features and benefits provided by a Pershing Brokerage Account, offered by Jersey Benefits Advisors, which include:

· Consolidated statement which shows all investments including money market funds, stocks, bonds, mutual funds, unit investment trusts, partnerships, brokered CD’s and annuities

· Daily sweep of idle cash into a money market account

· Available borrowing power for Margin approved accounts

· Procash checking services

· Free ACH transactions from checking to brokerage and from brokerage to checking

· Electronic funds transfer services

· Free dividend reinvestment

· Direct deposit of payroll, social security, pension checks, etc.

· Online access to account information

· Access to numerous mutual funds from different investment companies as well as variable annuities* from many insurance companies

· Systematic investment into mutual funds in order to purchase shares on a monthly, quarterly or annual basis utilizing dollar cost averaging

If you have any questions, feel free to contact me through my websites listed below.

John Kaighn is a Registered Investment Advisor with Jersey Benefits Advisors and writes articles on various business and investment information, ideas and opportunities. For more information about this and other topics you can visit Jersey Benefits Advisors and The Kaighn Report

Of Bad Banks & Retribution

2009-02-05T06:24:00.010-05:00

Now that the Obama Administration is considering the idea of a "bad bank" to clean up the toxic assets on bank balance sheets, the concern turns to how the assets should be valued. As I discussed in my blog post called Resolution Trust Corporation Redux there is precedence for this type of action, which goes back to our Savings & Loan crisis during the 1980's. While the RTC seized the assets from failed Savings & Loan institutions and allowed the insolvent ones to go out of business, depositors assets were merged into solvent banks and individual depositors didn't lose their money.

Recently, I read an editorial by Robert C. Posen of MFS Investment Management. The valuation method he suggests for the toxic assets on bank balance sheets has merit and should be explored. While it is less sanguine than the RTC process of seizing assets and allowing the company to go out of business, Posen's idea attempts to deal with the fact that the toxic assets of today may still have a great deal of intrinsic value, but marking them to market, a market which has been frozen for six months may not be the best way to deal with this situation.

Posen suggests that "after the Treasury has determined a best estimate of the assets current value, they should offer the bank a cash payment equal to 80% of that value. For the remaining 20% Treasury should provide the bank with a capital certificate, which would count as common stock in determining whether the bank meets its capital requirements". This would help to insure that the Treasury doesn't overpay for the assets, which would help protect taxpayers, and should entice the banks to participate in the program, because the prices won't be too low.

Furthermore, this plan would give taxpayers and the banks an opportunity to benefit from a sale of the assets in the future. The certificate given to the bank would entitle it to 80% of any profit that might be made on the asset when it is sold by the government. If the government sells the asset at a break even price or for a loss, the bank would be entitled to nothing.

Click here to read the entire editorial How to Value Toxic Bank Assets

I've also copied a blog entry by Edmundo Braverman of WallStreetOasis.com which discusses the quest to find a scapegoat for this most recent financial debacle.

A Pound of Flesh

© 2009 Edmundo Braverman, WallStreetOasis.com

Now that the media and Congress have succeeded in deflecting all blame for the current crisis to Wall Street, they've begun their frantic search for the fall guy. You know the guy I'm talking about. The one guy who personifies all that is wrong with the world and is deserving of limitless scorn and a hefty prison sentence. Think Ken Lay of Enron, Bernie Ebbers of WorldCom, and Dennis Kozlowski of Tyco.

In the Roman circus that is the 24/7 news cycle, the crowd is getting restless and they want blood. It's not their fault they were thrown out on their asses after defaulting on an adjustable rate mortgage that represented 65% of their take-home pay. That house was supposed to go up in value, damn it! Now their blood lust must be sated. Always a willing accomplice to government skulduggery, the media is deciding whom to throw to the mob, even as we speak.

We all know Barney Frank, arguably the chief architect of the housing demise, will never see the inside of a jail cell..... To read more click here
John H. Kaighn

Jersey Benefits Advisors

The Kaighn Report

Jersey Benefits Advisors Winter 2009 Newsletter

2009-01-15T07:43:00.010-05:00

MARKET WATCH

Trying to ascertain a realistic assessment of the current economic situation is tenuous, at best, as we begin 2009. Finding a balance between the people who believe we are actually experiencing financial Armageddon, and those who perpetuate that fear for political advantage, is where I find myself at this point in time. History is always a good place to look to determine if a financial panic has some precedent we can use to guide our decisions.

The US economy has been in recession since December of 2007, according to the National Bureau of Economic Research, and unemployment will continue to increase well into 2009. This recession could be the worst since the 1973-75 and 1981-82 recessions, and possibly the worst since the Great Depression. If you look in the right column , there is a historical list of various recessions and their duration. While not attempting to downplay the severity of the current economic slump, it is quite evident we have not reached the depths of the Great Depres-sion, despite sensational media reporting.

Below is a list of recessions, since 1926 and their duration.

1929-1933, 43 months in duration (Great Depression).

1981-1982, 16 months in duration.

1973-1975, 16 months in duration.

1937-1938, 13 months in duration.

1926-1927, 13 months in duration.

2007-2008, 13 months in duration.*

1970, 11 months in duration.

1948-1949, 11 months in duration.

1960-1961, 10 months in duration.

1953-1954, 10 months in duration.

Government response has been intense. Whether the stimulus planned can jumpstart the economy remains to be seen. There are many who believe government stimulus is a waste of taxpayer money, that it will go to family members, and friends of the politicians who sponsor legislation, and our children will be left with European style taxes for generations. It seems that the taxpayers in this country are psychologically wrestling with the choice between free market capitalism and the safety net of increased socialism.

As I mentioned earlier, I tend to look for balance between the multitude of opinions, so I think we will avert disaster, but the price will be more government and a period of slower growth. It is not possible for us to have low taxes and deficits of a trillion dollars for very long. For now, however, even people who believe in free markets realize the government does have a role to play when panic grips our financial system. This is especially true when government policies, such as "affordable housing initiatives" and Corporate Average Fuel Economy (CAFÉ) standards have exacerbated problems for certain industries. The cost down the road will be high, especially as taxpayers weigh the option of further nationalizing the health care system.

The markets have been humbling to many money managers this year, and as you know from the end of the year statistics, quite dismal. The Dow Jones Industrial Average ended 2008 at 8,776.39, which is a decline of 33.84% from the 2007 close of 13,264.82. The S&P 500, which reflects the broader market, was down 38.49% from its 2007 level of 1,468.36 and closed at 903.25. The NASDAQ index dropped from 2,652.28 to 1,577.03 to end 2008 with a 40.54% loss.

In the next article, I discuss ways to survive and thrive in this market. The next year or so is a buying opportunity!

INVESTING DURING THE RECESSION

I stated in Market Watch that the markets humbled many money managers in 2008, and with this downturn comes the chorus of concerns about not being able to make money in the stock market, because it is too volatile. At first glance, the argument seems plausible, because if you look at the indices, and their returns to date, they are abysmal. In fact, on November 20, 2008, the S&P 500 fell to a low of 752.44 not seen since the 754.72 close on April 15, 1997. At that point the S&P 500 was 51.92% lower than the high set in October 2007. From November 20 through the end of 2008, the S&P 500 gained back 20%.

There is no doubt the stock market has been a real roller coaster ride, and the 2008 lows will probably be tested in 2009. When you analyze the numbers, and understand how rapidly the market can recover, you begin to understand knee jerk reactions are not the best responses to this volatility. In fact, I am of the opinion the only way those of us who work for a living have a chance to build wealth is to continue to save and stay invested during this roller coaster ride.

Furthermore, while it is true there was a market low of 51.92% in the S&P 500 in November, those of us who kept their investments didn’t realize that loss, except psychologically. These gains and losses are temporary paper fluctuations that are only realized when you sell. Variable annuities can protect future income, if you are concerned and close to retirement.

With the markets off more than 30%, every share you buy in your 401k, 403b, ROTH IRA, IRA, 529 plan, brokerage account or mutual fund is being purchased at a discount. I feel this buying opportunity will continue for at least 6 months and possibly longer. When the markets recover, as they always do, all of your old shares, plus the new ones you purchase will bring your account to a higher level than it was before the recession.

Click on the graphic to make it larger if you have difficulty viewing it!

It is true nobody has a crystal ball to tell us exactly when the markets will recover, but once again history is where I usually go to help me understand what we are experiencing and how best to survive and thrive. The graphic above helps put some of the current conditions into perspective. The first graph depicts the recent job losses. While the 2,589,000 jobs lost in 2008 were the most since 1945, the percentage of jobs lost was only 1.88%. This compares favorably with the 2.34% of jobs lost in the 81-82 recession.

The second graph shows that unemployment peaks some months after a recession has ended. The recessions are noted by the shaded areas and the line depicts the unemployment rate. Since trying to time these trends is an inexact science, it is my opinion patience, discipline and calm are the keys to building wealth.

PROTECTING YOUR ASSETS IN A DOWN MARKET

Many of you have invested in the Transamerica and MetLife Annuities, so I want to remind you, once again, about the Guaranteed Minimum Income Benefit. This rider protects the assets so your account will continue to grow in a down market. Look for the line item GMIB, Income for Life or Managed Annuity Program to ascertain this value.

While the market value reflects the turmoil in the stock market, the beauty of these products is their insured value during times of market upheaval. These products help to protect your assets and are an especially good investment for retirement assets. They are great for anyone who wants some insurance on their investments, especially if you are going to be drawing income in the near future. Contact me for an appointment or more information.

John Kaighn

Jersey Benefits Group, Inc.

Investment Advisory Services offered through:
Jersey Benefits Advisors
P.O. Box 1406
Ocean City, N.J. 08226
Phone: 609 827 0194
Fax: 609 861 9257
Email: kaighn@jerseybenefits.com
Http://www.jerseybenefits.com

Securities offered through:
Transamerica Financial Advisors, Inc.
A registered Broker/Dealer
1150 S. Olive St. Suite T-25
Los Angeles, CA 90015
800-245-8250
Member FINRA & SIPC

Third Party Administration and Insurance Services offered through:
Jersey Benefits Group, Inc
P.O. Box 1406
Ocean City, N.J. 08226
Phone: 609 827 0194
Fax: 609 861 9257
Email: kaighn@jerseybenefits.com
Http://www.jerseybenefits.com/

All opinions expressed in this newsletter are solely those of John Kaighn & Jersey Benefits Advisors, formerly known as Kaighn Financial Services.

Happy Holidays to Detroit and More!

2008-12-19T11:21:00.003-05:00

As the holidays rapidly approach, I would like to take a few moments to wish you a HAPPY and JOYOUS CHRISTMAS and HANUKA, as well as a HEALTHY and PROSPEROUS NEW YEAR!

The economy has been in recession since December of 2007 and will most likely continue to shed jobs into 2009. While this recession could be the worst since the 1973-75 and 1981-82 recessions, and possibly the worst since the Great Depression, the response by the government, regardless of your politics, has been totally different from the government response that caused the Great Depression. The amount of stimulus injected into the economy this year, and the plans for 2009, will usher in the next phase of the business cycle by the end of 2009 or sooner. Below is a list of recessions, since 1926 and their duration.

1929-1933, 43 months in duration (Great Depression).
1981-1982, 16 months in duration.
1973-1975, 16 months in duration.
1937-1938, 13 months in duration.
1926-1927, 13 months in duration.
2007-2008, 12 months in duration.*
1970, 11 months in duration.
1948-1949, 11 months in duration.
1960-1961, 10 months in duration.
1953-1954, 10 months in duration.

Sensational reporting by the media has fueled an overblown sell off in the stock market, which seems to be abating. It is my opinion we will continue to experience market volatility during the first half of 2009. When the market point swings become boring to the media, and unemployment peaks, the recession will be nearing an end. By then, a new bull cycle will already have emerged. Those of you who have continued to invest during this downturn will reap rewards quickly during the next expansion. Those considering putting cash to work should do so by dollar cost averaging over the next six months.

Lately, it has been The Big 3 automakers getting battered by Congress, which continues to refuse to accept its fair share of responsibility for the automakers plight, as well as that of the housing and financial services industries. The automakers will receive some government aid through TARP, even though the Treasury is reluctant to provide the funds through this mechanism. The perceived social disruption caused by the bankruptcy of the automakers during a time of recession is just too risky to leave to chance. It seems that the taxpayers in this country are psychologically wrestling with the choice between free market capitalism and the safety net of increased socialism. It is impossible to have low taxes and the government guaranteeing everything. At some point, which more than likely is with the bailout of Detroit, the government involvement in guaranteeing that certain companies will not fail must end.

The moral hazard that has been created will probably lead to more foolhearty risks being taken at some point in the future. For now, however, even people who believe in free markets realize the government does have a role to play when panic grips our financial system. This is especially true when government policies, such as CAFE standards and "affordable housing initiatives" have exacerbated problems. The cost down the road will be high, especially as taxpayers weigh the option of further nationalizing the health care system.

Many of my clients have invested in the MetLife and Transamerica Variable annuities over the last few years, and have had the reassurance that their future income for retirement is protected. The insurance companies, except for AIG, have faired well during this period, due to their capital requirements and conservative investment strategies. While the market value of an annuity can fluctuate, the guaranteed income benefit continues to increase. While variable annuities may not be right for everyone, most people can benefit from some insurance on their investments. As the market recovers, so will the market value of all your holdings.

During these difficult economic times, do you feel like you’re playing hide-and-seek with your investment representative? Are you ready to do business with a firm that focuses upon you – your personal investment goals and objectives, and your retirement dreams? If so, then I am here to assist you with any questions or concerns you might have about your investments. If you’re looking for a new advisor, or would like to discuss your investments with me to get a fresh perspective, then call or email today.

John H. Kaighn

Jersey Benefits Advisors

The Kaighn Report

NBER Makes It Official: Recession Started in December 2007

2008-12-01T12:36:00.005-05:00

As I mentioned in the 3rd Quarter newsletter at some point in the future, the National Bureau of Economic Research would determine the economic situation we are experiencing to be a recession. Well, that time has come. Official recession watchers at the NBER said today that the U.S. economy is in recession, and it began in December 2007. Here is the text of their statement.

The Business Cycle Dating Committee of the National Bureau of Economic Research met by conference call on Friday, November 28. The committee maintains a chronology of the beginning and ending dates (months and quarters) of U.S. recessions. The committee determined that a peak in economic activity occurred in the U.S. economy in December 2007. The peak marks the end of the expansion that began in November 2001 and the beginning of a recession. The expansion lasted 73 months; the previous expansion of the 1990s lasted 120 months.

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators. A recession begins when the economy reaches a peak of activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion.

Read their full statement here.

Now the task at hand is for investors to ascertain the depth and length of this downturn. Since the stock market is a leading indicator of the economic cycle, once it can be determined that the economy is healing and poised for recovery, stocks will begin their next advance. While a recovery is something we are all hopeful will be occurring sooner than later, it is my opinion there will be some false starts before the next bull market begins in earnest.

John Kaighn

Jersey Benefits Advisors

The Kaighn Report

The Desolate Wilderness and This Fair Land

2008-11-26T06:40:00.006-05:00

I usually write the bulk of the material that appears on my blog, but every now and then I feature other authors who have a flair for great writing. This is a piece that is an annual ritual in a national publication that corresponds with the Thanksgiving Holiday season. It does a nice job of reminding the reader of the reasons to be thankful and to whom we owe that gratitude. I hope you enjoy it

The Desolate Wilderness

Here beginneth the chronicle of those memorable circumstances of the year 1620,as recorded by Nathaniel Morton, keeper of the records of Plymouth Colony, based on the account of William Bradford, sometime governor thereof:

So they left that goodly and pleasant city of Leyden, which had been their resting place for above eleven years, but they knew that they were pilgrims and strangers here below, and looked not much on these things, but lifted up their eyes to Heaven, their dearest country, where God hath prepared for them a city (Heb. XI, 16, and therein quieted their spirits. When they came to Delfs-Haven they found the ship and all things ready, and such of their friends as could not come with them followed after them, and sundry came from Amsterdam to see them shipt, and to take their leaves of them. One night was spent with little sleep with' the most, but with friendly entertainment and Christian discourse, and other real expressions of true Christian love.

The next day they went on board, and their friends with them, where truly doleful was the sight of that sad and mournful parting, to hear what sighs and sobs and prayers did sound amongst them; what tears did gush from every eye, and pithy speeches pierced each other's heart, that sundry of the Dutch strangers that stood on the Key as spectators could not refrain from tears. But the tide (which stays for no man) calling them away, that were thus loath to depart, their Reverend Pastor, falling down on his knees, and they all with him, with watery cheeks commended them with the most fervent prayers unto the Lord and His blessing; and then with mutual embraces and many tearsthey took their I leaves one of another, which proved to be the last leave to many of them.

Being now passed the vast ocean, and a sea of troubles before them in expectations, they had now no friends to welcome, them, no inns to entertain or refresh them, no houses, or much less towns, to repair unto tb seek for succour; and for the season it was winter, and they that know the winters of the country know them to be sharp and violent, subject to cruel and fierce storms, dangerous to travel to known places, much more to search unknown coasts. Besides, what could they see but a hideous and desolate wilderness, full of wilde beasts and wilde men? and what multitudes of them there were, they then knew not: for which way soever they turned their eyes (save upward to Heaven) they could have but little solace or content in respect of any outward object; for summer being ended, all things stand in appearance with a weatherbeaten face, and the whole country, full of woods and thickets, represented a wild and savage hew. If they looked behind them, there was a mighty ocean which they had passed, and was now as a main bar or gulph to separate them from all the civil parts of the world.

This Fair Land

Anyone whose labors take him into the far reaches of the country, as ours lately have done, is bound to mark how the years have made the land grow fruitful. This is indeed a big country, a rich country, in a way no array of figures can measure and so in a way past belief of those who have not seen it. Even those who journey through its Northeastern complex, into the Southern lands, across the central plains and to its Western slopes can only glimpse a measure of the bounty of America.

And a traveler cannot but be struck on his journey by the thought that this country, one day, can be even greater. America, though many know it not, is one of the great underdeveloped countries of the world; what it reaches for exceeds by far what it has grasped.

So the visitor returns thankful for much of what he has seen, and, in spite of everything, an optimist about what his country might be. Yet the visitor, if he is to make an honest report, must also note the air of unease that
hangs everywhere.

For the traveler, as travelers have been always, is as much questioned as questioning. And for all the abundance he sees, he finds the questions put to him ask where men may repair for succor from the troubles that beset them.

His countrymen cannot forget the savage face of war. Too often they have been asked to fight in strange and distant places, for no clear purpose they could see and for no accomplishment they can measure. Their spirits are not quieted by the thought that the good and pleasant bounty' that surrounds them can be destroyed in an instant by a single bomb. Yet they find no escape, for their survival and comfort now depend on unpredictable strangers in far off corners of the globe.

How can they turn from melancholy when at home they see young arrayed against old, black against white, neighbor against neighbor, so that they stand in peril of social discord. Or not despair when they see that the cities and countryside are in need of repair, yet find themselves threatened by scarcities of the resources that sustain their way of life. Or when, in the face of these challenges, they turn for leadership to men in high places-only to find those men as frail as any others.

So sometimes the traveler is asked whence will come their succor. What is to preserve their abundance, or even their civility? How can they pass on to their children a nation as strong and free as the one they inherited from their forefathers? How is their country to endure these cruel storms that beset it from without and from within?

Of course the stranger cannot quiet their spirits. For it is true that everywhere men turn their eyes today much of the world has a truly wild and savage hue. No man, if he be truthful, can say that the specter of war is banished. Nor can he say that when men or communities are put upon their own resources they are sure of solace; nor be sure that men of diverse kinds and diverse views can live peaceably together in a time of troubles.

But we can all remind ourselves that the richness of this country was not born in the resources of the earth, though they be plentiful, but in the men that took its measure. For that reminder is everywhere in the cities, towns, farms, roads,
factories, homes, hospitals, schools that spread everywhere over that wilderness.

We can remind ourselves that for all our social discord we yet remain the longest enduring society of free men governing themselves without benefit of kings or dictators. Being so, we are the marvel and the mystery of the world, for that enduring liberty is no less a blessing than the abundance of the earth.

And we might remind ourselves also, that if those men setting out from Delftshaven had been daunted by the troubles they saw around them, then we could not this autumn be thankful for a fair land.

These editorials have appeared annually in the Wall Street Journal since 1961.

John Kaighn

Jersey Benefits Advisors

The Kaighn Report

Web Business Review

What is a 529 plan?

2008-11-04T06:14:00.002-05:00

Saving money for college expenses is a goal I hear many young parents express, and one of the best ways to build tax deferred savings for college is the 529 plan. A 529 plan is a tax-advantaged savings plan designed to encourage saving for future college costs. 529 plans, legally known as “qualified tuition plans,” are sponsored by states, state agencies, or educational institutions and are authorized by Section 529 of the Internal Revenue Code.

There are two types of 529 plans: pre-paid tuition plans and college savings plans. All fifty states and the District of Columbia sponsor at least one type of 529 plan. In addition, a group of private colleges and universities sponsor a pre-paid tuition plan.

There are differences between pre-paid tuition plans and college savings plans, and each individual family needs to determine which plan may be right for their needs. Pre-paid tuition plans generally allow college savers to purchase units or credits at participating colleges and universities for future tuition and, in some cases, room and board. Most prepaid tuition plans are sponsored by state governments and have residency requirements. Many state governments guarantee investments in pre-paid tuition plans that they sponsor.

College savings plans generally permit a college saver (also called the “account holder”) to establish an account for a student (the “beneficiary”) for the purpose of paying the beneficiary’s eligible college expenses. An account holder may typically choose among several investment options for his or her contributions, which the college savings plan invests on behalf of the account holder. Investment options often include stock mutual funds, bond mutual funds, and money market funds, as well as, age-based portfolios that automatically shift toward more conservative investments as the beneficiary gets closer to college age. Withdrawals from college savings plans can generally be used at any college or university. Investments in college savings plans that invest in mutual funds are not guaranteed by state governments and are not federally insured.

John Kaighn

Jersey Benefits Advisors

The Kaighn Report

Jersey Benefits Advisors Newsletter Fall 2008

2008-10-18T08:35:00.006-04:00

DOWN BUT NOT OUT! THE FINANCIAL CAPITAL OF THE WORLD HAS BEEN HUMBLED, BUT NOT DESTROYED!

Market Watch

I ended my summer newsletter with the following assessment of where our economy was heading. It was written before talk of the Emergency Economic Stabilization Act of 2008, which became law on October 3, 2008. “With all of the stresses on the US economy, confirmation of a recession could become a reality either in the second half of this year, or early in 2009. The healing process necessary to recover from the mortgage fiasco and oil shock is underway.”

There is no doubt that anger, frustration and fear are feelings that are being experienced by many of us as we’ve witnessed the deflation of the housing bubble and the subsequent credit crisis which culminated in the emergency relief plan mentioned above. It is important to understand that many economists think this period will be labeled a recession, when the dust has settled and the National Bureau of Economic Research (NBER) assesses the situation, some time in the future. Meanwhile, we are faced with the here and now and surviving this period, while planning for the recovery.

It is important to understand how we got here in order to avoid the same mistakes in the future. The initial media reaction was to blame Wall Street for this fiasco, but as events play out, it is being understood the blame can be equally placed on the shoulders of government, as well as many of the citizens of this fair land who used the equity in their homes as a bank, and stretched for outsized gains on their investments.

At the heart of the matter sit the two Government Sponsored Enterprises (GSE's) Fannie Mae and Freddie Mac. By being a GSE these companies were treated like they had the full faith and backing of the Federal Government, even though they didn't. A little history helps to understand the dilemma.

Fannie Mae was created by the government during the Great Depression to buy mortgages, which they guaranteed with the full backing of the government. In 1968, President Johnson structured Fannie Mae as a government sponsored enterprise, without the guarantee. In the 1970's, Freddie Mac was created and the two quasi public entities began buying mortgages and packaging them into securities, which were purchased by banks, investors, governments and others around the world, because of the “implicit guarantee” that if anything went wrong, the US government would back the securities. Fannie and Freddie were also encouraged by the government to increase lending for subprime mortgages in order to advance the government’s agenda for “affordable housing”.

As we all know by now, the two GSE's did fail, and while the reasons are varied, the implicit guarantee is now an explicit guarantee. Furthermore, the actions of Fannie Mae and Freddie Mac made housing more expensive, not more affordable!

The ensuing credit crunch has had a chilling effect on the stock market, which has not been very pretty this year. At the end of the third quarter, the DJIA was 10,850.7, the S&P 500 clocked in at 1,164.74 and the NASDAQ finished at 2,082.3. All of the indices are in bear market territory and down significantly for the year.

There will be some false starts and possibly some more gut-wrenching ups and downs, especially as the election bears down on us. Fortunately, all bear markets end, just as their counterparts do. Usually, when you least expect it!

Economic Outlook

Regardless of your feelings about the government rescue plan and where the fault lies, the reality of the situation is that the government has chosen to clean up a mess it helped create. The implications for the broader economy remain to be seen, but one thing is for sure, the road to recovery will be bumpy and prolonged. While it is generally believed the current crisis is not over, general consensus is that it is beyond halftime, to use a football metaphor, and possibly in the fourth quarter. I doubt very much the recovery will be instantaneous, even with the recent government actions. Look for a period of extreme volatility as we decide on a new President.

When the news is all bad, and the media paints a dire picture of the future, it is difficult to take the steps which could help you to benefit from the current financial landscape. Those of you who are investing in retirement plans or other investment accounts on a monthly basis, are picking up shares at a discount. While your account value may be down, once the market begins to rebound, the value of your account will increase rapidly, reflecting the increased number of shares you own. If you are not regularly contributing and have some available cash, the next several months should be a good time to add to your account, but I would caution against making a large investment at once.

To help you conquer investing phobia, consider this study by Psychologist Paul Slovic of the University of Oregon. In 2001 he had investors estimate the performance of their portfolio over the next 12 months and the decade to come. Only 6.7% of investors expected a zero or negative return in 2001 and only 1.3% thought they’d have no gains over the next 10 years. He asked investors the same question on September 29, 2008 and 36% of investors saw no profits for the current year and 5% predicted their portfolios would go nowhere for the full decade. Obviously, investors view of the next decade is being shaped by events of the last few days. Looking backward at where the market has been is a surefire way to ensure you will miss opportunities going forward. According to Jason Zweig, author of the Intelligent Investor column in the Wall Street Journal, “You need only two things in order to have an edge in today’s market: cash and courage”.

While the current economic situation seems challenging, the actions by the Federal Reserve and governments around the world will prevent the doomsday scenario of global depression. History will be the judge as to the severity of today’s difficulties, but lessons learned during the Great Depression indicate no government action can be catastrophic. I’ve opted to suspend consolidated statements until the year’s end, so call me to discuss quarterly statement concerns.

Protecting Your Assets In a Down Market

For those of you invested in the Transamerica and MetLife Annuities, I want to remind you about the Guaranteed Minimum Income Benefit on your account which protects the assets so your account will continue to grow in a down market. Look for the line item GMIB, Income for Life or Managed Annuity Program to ascertain this value. While the market value reflects the turmoil in the stock market, the beauty of these products is their insured value during times of market upheaval. These products help to protect your assets and are an especially good investment for retirement assets. While nobody likes to see losses in value, it is reassuring to know these products have protection against downside risk and that insurance companies must have adequate capital in reserve.

Investment Advisory Services offered through:
Jersey Benefits Advisors
P.O. Box 1406
Ocean City, N.J. 08226
Phone: 609 827 0194
Fax: 609 861 9257
Email: kaighn@jerseybenefits.com
Jersey Benefits Advisors

Securities offered through:
Transamerica Financial Advisors, Inc.
A registered Broker/Dealer
1150 S. Olive St. Suite T-25
Los Angeles, CA 90015
800-245-8250
Member FINRA & SIPC

Third Party Administration and Insurance Services offered through:
Jersey Benefits Group, Inc
P.O. Box 1406
Ocean City, N.J. 08226
Phone: 609 827 0194
Fax: 609 861 9257
Email: kaighn@jerseybenefits.com
Jersey Benefits Group, Inc.

John H. Kaighn

Jersey Benefits Advisors

The Kaighn Report

Capitulation Anyone?

2008-10-10T08:06:00.004-04:00

The events we are witnessing during this financial meltdown will definitely be considered a historic event, as the stock markets around the world unwind in a whirlwind of panic selling. The close on October 9, 2008 has the major US indices firmly in bear market territory and the market is bordering on being absurdly oversold, which usually marks the capitulation and bottom of a bear market. It would be quite ironic if this level held as the bottom, especially since the all time highs for the DJIA and S&P 500 were set a year ago to the day. At this juncture, the DJIA is 39.4% off the October 9, 2007 high, while the S&P 500 is 41.9% below its peak. As is usually the case during market downturns, the NASDAQ is now 42.5% below its high water mark, which was set on October 31, 2007.

At the time of this writing, futures are indicating a drop at the open of the US markets, while Asian and European markets are 7% - 10% lower. A large part of the selling is due to deleveraging by hedge funds and others who overextended during the credit bubble. Margin calls cause investors to come up with more cash or sell assets. It looks like asset sales are the order of the day. I'm sure there are many smaller investors who are also selling, following the herd and fueling the panic.

Just as irrational exuberance has faded and illogical pessimism has become the mantra for the day, the trepidation investors are feeling now will elapse and calm will be restored. Real damage has been done to the portfolios of millions of investors around the world, and bailing out at this point, especially if you don't need the cash today, is foolhardy at best. Besides, if the market were to drop over 50% and the government went bankrupt, which was a rumor in the trading pits yesterday, what would the cash under your mattress be worth anyway? Of course, you could always buy gold at over $900.00 dollars an ounce, because doesn't that just ALWAYS keep going up? You know, like stocks, housing, oil, commodities and of course, tulips!

John H. Kaighn

Jersey Benefits Advisors

The Kaighn Report

The Rescue on Main Street

2008-09-24T07:38:00.007-04:00

Frustration and anger are two feelings that come bubbling forth from my gut as I watch the drama unfold in regard to the rescue plan for our financial system being deliberated before my eyes. At the heart of the matter sit the two Government Sponsored Enterprises (GSE's) Fannie Mae and Freddie Mac. The utter disregard for the facts by the mainstream television and print media, Barney Frank and Christopher Dodd completely amazes me.

The implicit guarantee of government backing for mortgage securities peddled by the two GSE's, as they operated under the guise of "providing affordable housing", gave them the ability to enjoy lower interest rates on their bonds, which in turn allowed them to prevail over private companies providing mortgage backed securities. The increased leverage, lack of competition and tacit approval of their operations by politicians receiving campaign contributions through their lobbying efforts allowed their CEO, Franklin Raines, to earn over 100 million dollars, before being ousted for accounting irregularities. Now Frank and Dodd are trying to position themselves as champions of Main Street, while the financial system grinds to a halt. For a more in depth analysis of the Fannie & Freddie debacle, see the articles in the Wall Street Journal and Investors Business Daily from Tuesday, September 23, 2008.

Ben Bernancke was elevated to Federal Reserve Chairman because he was respected for his knowledge and credentials. Hank Paulson was called upon to be Treasury Secretary because of his knowledge of the financial markets. If they are this concerned about the current crisis in our financial system, I think we better stop with the politics and soberly address the situation. This is NOT a bailout of Wall Street, but rather a rescue of our financial system. If the stock market is halved again in this decade, the pain on Main Street will be devastating. We all enjoyed the rising equity in real estate from 2002 through 2006, but the sad reality is much of it was based on smoke and mirrors. Perhaps this will usher in an era of building wealth methodically through investing, rather than the get rich quick schemes of day trading, real estate flipping and other fads which have led to bubbles and busts. One could only hope!

John H. Kaighn

Jersey Benefits Advisors

The Kaighn Report

Resolution Trust Corporation Redux?

2008-09-17T07:37:00.006-04:00

Perhaps with the government loan guarantees for the orderly liquidation of AIG, it might be time to establish an entity similar to the Resolution Trust Corporation, which was charged with the orderly liquidation and auction of assets of failed savings & loans back in 1989. While the government could actually make money on the deal it crafted with AIG, the establishment of an entity, such as the RTC, might make any further bankruptcies of banks, investment banks or insurance companies more routine, and eliminate the sensational reporting of these various crises when entities deemed "too large to fail" begin to falter. The current financial difficulties we are now experiencing are not without precedent, and the irresponsible references to current events being similar to the Great Depression are simply unacceptable.

While I realize Mr. Obama is running for President, he should be using his position to reassure the public that the economy is indeed sound and able to deal with situations, such as the ones we've been watching play out for over a year now. The Federal Reserve made policy errors, failed to increase the money supply, and failed to coordinate the orderly liquidation of assets during the Great Depression. The unemployment rate was a staggering 25%, not 6% as it is currently, and the stock market had lost MOST of its value during the market meltdown prior to the Great Depression, not 4% as happened with the "historic" 504 point decline on Monday. In fact, the 508 point decline in 1987 represented a 22.6% market crash, so we must use perspective when discussing the current situation.

Finally, in reference to the AIG situation, it is important to relay to the public that while the insurer is one of the largest insurance companies in the world and deemed too large to fail, the policy holders are NOT in jeopardy. With the loan guarantees, AIG's insurance businesses will be auctioned off to other insurance companies, who know it is in their best interest to be sure those policies are made whole. Insurance companies are also regulated by state insurance commissions which also back the explicit guarantees in insurance policies. An economy, in conjunction with the government, that can react to these situations and have the ability to craft deals that protect account holders and policy holders, but doesn't reward CEO's and common shareholders, is one that is fundamentally sound. Grandstanding and pointing fingers doesn't solve the problem.

The Congress, if gets off its duff and adopts a credible energy policy utilizing all of our resources to break our dependence on foreign oil, could go a long way toward STIMULATING a sound but faltering economy. Leadership will be key as we go forward. This is no time for our leaders to be crying wolf to get elected. A clear and level headed response to the economic challenges we face is paramount to reforming the weaknesses in our system.

John Kaighn

Jersey Benefits Advisors

The Kaighn Report

Fannie Mae and Freddie Mac RIP

2008-09-11T07:34:00.007-04:00

The Government Sponsored Entities (GSE) known as Fannie Mae and Freddie Mac succummed to the credit crisis and were taken over by the US government, which brings to a close their checkered history as a failed government experiment. While the Bush administration will shoulder the criticism for propping up private companies and serving the interests of the rich, this is simply not the reality of the situation. Unfortunately, many in this administration, as well as previous administrations and Congresses voiced their concerns about the "implicit" government backing these companies enjoyed, but to no avail.

By being a GSE these companies operated as if they had the full faith and backing of the Federal Government, even though they didn't, because they were quasi public companies. A little history helps to understand the dilemma. Fannie Mae was created by the government during the Great Depression to buy mortgages, which they guaranteed with the full backing of the government. In 1968, President Johnson created the current structure of Fannie Mae, but without the guarantee. In the 1970's, Freddie Mac was created and the two quasi public entities began buying mortgages and packaging them into securities, which were purchased by banks, investors, governments and others around the world, because of the implicit guarantee that if anything went wrong, the US government would back the securities.

As we all know by now, the two GSE's did fail, and while the reasons are varied, the implicit guarantee is now an explicit guarantee. The strategy of the government should be to shrink them and eventually let them become a relic of a failed business model. The best way to back mortgage securities is by a fully capitalized private entity with enough capital to guarantee the mortgages and mortgage backed securities it has underwritten. Ultimately an expensive lesson has been learned, hopefully! You can't write mortgages for people who don't have the ability to pay them, and the bank that underwrites a mortgage must have a stake in the security that ultimately buys the mortgage. It sounds so simple!

On this 7th anniversary of the horrendous attacks on our country by Islamic terrorists, I just want to let the families of those who lost their lives know there are some people in this country who have not forgotten. May you find peace!

John Kaighn

The Kaighn Report

Jersey Benefits Advisors

How Would You Feel If You Were Hillary?

2008-08-29T17:48:00.007-04:00

While Hillary Clinton must be crying in her beer at the thought of Sarah Palin receiving her consolation prize, and having the opportunity to be the first woman to break the glass ceiling and actually become the first Vice President of the US, Obama wrestles with the links to his radical past, the most damning being the unrepentant terrorist of the Weather Underground, the infamous William Ayers. The recently concluded Democratic National Convention painted America as a country whose glass is half empty, the usual liberal, excuse me, Progressive viewpoint of our nation. The Clintons, for their part, endorsed Obama's nomination, but it was most definitely a half-hearted backing, as Hillary eyes the ticket for 2012.

Meanwhile, the economy posted a 2nd Quarter GDP of 3.3%, hardly recessionary. While the housing and financial sectors are a drag on economic growth, exports and a weaker dollar added significantly to the GDP expansion. While oil and other commodities are still high, their recent selloff has definitely had a positive effect on the inflation outlook. While the National Bureau of Economic Research (NBER) defines a recession more broadly than two consecutive quarters of negative GDP growth, by using the definition of "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales, by either definition, the economy is not in recession at this point.

The markets have been trading in a several hundred point range for most of the year since they originally tanked in January. It remains to be seen if the economy can sustain the growth of the second quarter without the benefit of government stimulus. As the summer draws to a close and the election is in our face, the remainder of the third quarter and the fourth quarter are shaping up to be as volatile, if not more volatile than the last 8 months have been. Unemployment is expected to remain at 5.7%, the commodity bubble has popped, inflation is easing, the credit crunch and housing fiasco remain a drag, and we have a Presidential election for entertainment. What's not to like?

John Kaighn

Jersey Benefits Advisors

Jersey Benefits Advisors Newsletter Summer 2008

2008-07-09T09:00:00.004-04:00

Market Watch

The chorus of troubling economic news continued to chip away at investor confidence with June being particularly brutal, and as the 2nd quarter of 2008 ended, the Dow Jones Industrial Average teetered on the brink of “officially” being in bear market territory. Of course by the conclusion of the 4th of July holiday, all of the stock market indices had succumbed to the dreaded 20% decline threshold, and there was no doubt the bear market was upon us. One might be tempted to ask what a good strategy might be to avoid being battered by a bear market. I would have to respond by saying the best strategy is to ride it out, prudently invest in as many sectors of the economy as you can, and enjoy the next recovery when it comes.

Nobody can predict with certainty when a bear market will begin and when it will end. Missing just a few days of being fully invested, when the market recovers, can do serious damage to your portfolio. In a study by Invesco Aim from December 31, 1997 to December 31, 2007 if an investor was fully invested in a fund that mirrored the S&P 500, the average annual total return was 5.8%, even though there was a bear market from March of 2000 through October of 2002. If an investor missed the best 10days by trying to time the market, the average annual return dropped to 1.02% per year. By missing the best 20 days, the average annual total return was –2.64%. If the investor missed the best 60 days, the average annual total return fell to –12.82%. The market rarely trumpets the next 300 point gain, so stay invested and dollar cost average.

If there is any positive spin I can offer to help ride out this rough patch in the market, it is to relay some research on bear markets by Bespoke Investment Group. They conducted a study of bear markets since 1940, and they found that the average bear market for the S&P 500 produced a decline of 30.4%. The length of the average bear market during that period was 386 days, and by the time the 20% decline threshold was reached, the bear market was 74% completed. While nobody enjoys a bear market, except the bears, it is somewhat reassuring to know that by the time you can confirm the fact that the bear market is official, it is almost over. The hindsight is much like officially designating a recession.
It is important to note at this juncture, by strict definition, we have not confirmed the economy is in recession. The first quarter GDP was revised to indicate the economy was growing at 1%. Unfortunately, this is not sufficient to support job growth and the unemployment rate has crept up to 5.5%. Along with slow economic growth, inflation has begun to rear its ugly head, so the Fed held interest rates at 2% in June, and indicated their concern about increased inflation in the minutes of the FOMC meeting.

The European Central Bank, citing inflation concerns in commodities, raised rates by 1/4 point, but indicated it was only a one time deal at this juncture. Of course nobody needs to hear much about the run up in oil prices, because we are confronted by it every time we fill up. Suffice it to say speculation, supply and demand, as well as the Olympics are all playing a part. Congress is trying to do something. God help us!

Here are the year to date numbers for the indices as of 6/30/08. The DJIA closed at 11,350.01 off 14.4%. The S&P 500 closed at 1,280 down 12.8% and the NASDAQ finished the first half of the year at 2,292.98 which is down 12.9%. Let the 2nd half begin.

ECONOMIC OUTLOOK

As I previously mentioned the economy continues to limp along with meager GDP growth, but not enough to generate a sufficient number of jobs for everyone choosing to work. The effect of historically high oil prices continues to add inflationary pressure to the prices of other goods, especially in the area of food products, which rely on the use of energy to produce and transport them to market. Low interest rates make the dollar unattractive for investors who have been flocking to commodities to improve returns. This in turn has also added to the advance in oil prices.

As the credit markets continue to remain tight, consumers cut back on driving and other discretionary spending, and China as well as the other emerging markets feel the pinch of reduced demand for their products, there will be a further slowdown economically in this country as well in other parts of the world. Already the economies of the US and the European Union are exhibiting extreme signs of weakness. When the Olympics are finished this August, look for diminished economic activity in China, as a great deal of the demand for oil and other commodities has been to improve infrastructure and air quality during their day in the spotlight.
With all of the stresses on the US economy, confirmation of a recession could become a reality either in the second half of this year, or early in 2009. The healing process necessary to recover from the mortgage fiasco and oil shock is underway.

Hydrogen Electric Prototype By Honda

For anyone who may have missed a review published in late November of 2007, I wanted to mention the Honda FCX Clarity, a vehicle which will be leased in Los Angeles and other select markets next summer. What makes this car unique is the fact that it is propelled by hydrogen and electric power. Vehicles that use hydrogen with fuel cell technology instead of gasoline are the cleanest technology, because they emit only water vapor into the air we breathe. These cars simply do not pollute. They can also use hydrogen from domestic energy sources, reducing our dependence on oil. While the economic viability of this prototype vehicle is still in question, this technology could be one of the answers to truly breaking the grip foreign oil has on our economy. Perhaps we’re ready this time.

John H. Kaighn

Jersey Benefits Advisors

Stock Market Comeback Faces Triple Threat

2008-06-23T06:38:00.002-04:00

It never seems to fail, but just as we get ready for quarterly account updates, the stock market decides to test it's lows for the year. While the market has technically avoided a bear market, and the economy has thus far avoided recession, the headwinds continue to mount. With the Presidential Election looming in the fall, this looks to be a summer of rhetoric and empty promises.

There are several solutions to the current mess we face concerning crude oil and energy. The Congress MUST override all environmental litigation and allow full scale drilling in ANWR and off the coasts. Full scale development of alternative energy sources is crucial, like the steps Honda has taken with their hydrogen/electric hybrid. Coal and nuclear energy sources must be utilized immediately, regardless of initial environmental impact. These steps would dampen speculation, even though this increased domestic energy production would not enter the market immediately, because much of the run up in oil prices is being driven by the same type of speculation that drove the dotcom bubble and the housing bubble. It is purely a perception of a lack of supply. Any chance the Congress has the nerve to take these steps? When you look at history, this was exactly the "nerve" which led to the development of the Alaskan Oil Pipeline. Had we only been serious about alternative energy solutions back in the late 70's and early 80's instead of conspicuous consumption!

Meanwhile, here is a reprint of a Marketwatch article on the threats facing the market a week before the end of the second quarter.

By Kate Gibson, MarketWatchLast Update: 6:00 AM ET Jun 21, 2008

NEW YORK (MarketWatch) -- U.S. stocks on Monday will attempt to recover from some hefty losses, but any comeback will likely be contingent on three factors: the price of crude oil, any hints of inflation, and developments in the troubled financial sector.

"Obviously this market is in lockstep with three things, the most important of which is the price of a barrel of oil," said Art Hogan, chief market strategist at Jefferies & Co.

On Friday, stocks sank as crude-oil futures gained, a trend that played throughout the week, as the weaker U.S. dollar added to the allure of oil and other commodities as a currency hedge. And, more trouble in the financial sector compounded market anxiety.

The Dow Jones Industrial Average ended at 11,842.69, off 220.4 points, or 1.8%, for the session. It lost about 465, or 3.8%, on the week.

Friday's finish marked the Dow's lowest close since March 10, when it settled at 11,740.15.

"Stocks finished a week that is best forgotten, and the Dow now finds itself flirting dangerously close with the pivotal 11,750 area," said Jon Nadler, senior analyst at Kitco Bullion Dealers.

And, while investors fretted about the impact of rising energy costs on the already soft economy, the credit crisis and its ongoing impact on the troubled banking sector last week continued unabated.

"We had a plethora of brokers talking about them, from the money centers to the regionals, and none of them were positive," said Hogan.

Merrill Lynch on Friday warned of investor capitulation on the regional banking sector, with analysts envisioning further dividend cuts as likely to be on the horizon. The broker cut its median earnings estimate for regional banks for 2008 by 15%, with J.P. Morgan analysts chiming in a prediction of further efforts to replenish reserves in the sector. .

"Merrill sees investors effectively throwing in the proverbial towel when it comes to bank stocks. With capitulation come buying opportunities, normally. A normal year 2008 has not been thus far," said Nadler.

Of the Dow's 30 components, 29 posted losses, with blue-chip financials among the hardest hit. Citigroup Inc. fell 4.3%, American Express Co. fell 3.4% and American International Group Inc. declined 3%.

The S&P 500 fell 24.9 points, or 1.9%, to 1,317.93, with all 10 of the index's industry groups posting declines, led by consumer discretionary, off 3.1%.

The S&P closed with a weekly loss of 3.1%.

Midway between its March low of 1,273 and May high of 1,426, the S&P appears headed back down toward its lows of three months ago, "as investors lose confidence that an economic recovery is just around the corner," said Kenneth Tower, chief market strategist at Covered Bridge Tactical LLC.

The Nasdaq Composite Index dropped 55.97 points, or 2.3%, to close at 2,406.09, giving the technology-laden index a loss of 3.1% for the week.

Bonded
As stocks sank, bond prices climbed, with the yield on the benchmark 10-year note, which moves in reverse of its price, falling to 4.16%.

The U.S. dollar declined against most currency rivals, while the price of gold climbed. .

And, with the price of crude already on the rise, the climb was further fueled by a published report of an Israeli dry run of an attack on Iranian nuclear facilities.

Crude for July delivery climbed $2.69 to end at $134.62 a barrel on the New York Mercantile Exchange, while uncertainty ahead of a meeting of oil producers and consumers this weekend in Saudi Arabia and China's hike in fuel prices helped push prices down 0.2% for the week.

In addition to energy concerns, next week brings a slew of reports that could shed further light on whether other costs are climbing as well.

"We will also be scouring the economic data calendar for signs of inflation," said Hogan.

The economic docket looks to be a busy one, particularly in regards to the ailing housing sector. Analysts expect the S&P/Case-Shiller Home Price Index will fall to 168.8 in April from 172.2 in March, with the report slated to be released Tuesday.

The second day of the week also brings June consumer confidence, which is projected to weigh in at a 16-year low.

On Wednesday, investors will receive durable goods in May, with the data expected to show a 1.0% rebound, along with an expected small hike in May new home sales, which are projected to rise to 530,000.

Thursday brings final first-quarter GDP, which analysts expect to be revised up to 1.2% from an initial 0.9%, along with initial jobless claims and existing home sales for May.

The May personal income report is due on Friday, along with a measure of consumer sentiment.

Added to the mix is the Federal Open Market Committee, or FOMC, which on Tuesday begins a two-day meeting, with Federal Reserve Chairman Ben Bernanke and his colleagues widely expected to step up talk about the risks of inflation, while not hiking benchmark lending rates from the current 2%.

"Fed projections on economy and inflation are also likely to be revised higher, laying the groundwork for a hike or two this fall," wrote analysts at Action Economics.

With any luck, the Saudi's will decide to add a bit more crude to the market as they conclude the oil summit held this weekend. However, even with facing strong U.S. pressure and global dismay over oil prices, Saudi Arabia could only say on Sunday it will produce more crude this year if the market needs it. Unfortunately, the vague pledge fell far short of U.S. hopes for a specific increase and may do little to lower prices immediately. For now, the current "oil shock" leaves Western countries with little choice but to move toward nuclear power and change their energy consumption habits, Britain's prime minister warned at a rare meeting of oil producing and consuming nations.

John Kaighn

Jersey Benefits Advisors

Crude Oil Prices Continue To Buckle

2008-06-02T10:16:00.006-04:00

As a follow up to my blog last week, it is interesting to see oil dropped below $126 a barrel due to fear that prices are cutting into demand and concerns about a probe into futures trading by a U.S. regulator. Light, sweet crude for July delivery was down $1.81 to $125.54 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe. On Friday, the contract settled at $127.35 a barrel, up 73 cents after dipping below $125 and then rebounding. July Brent crude futures fell $1.27 to $126.51 a barrel on the ICE Futures exchange in London.

In the U.S., which has just started its summer driving season, there is a real concern about record high fuel and energy prices. This has helped to bring oil down from the $135.09 a barrel trading record hit May 22. Data from the U.S. Energy Department and Federal Highway Administration and several surveys in recent days suggest American consumers are driving less.

The decision by some countries in Asia, like Indonesia and Taiwan, to lower subsidies on oil products, also was seen as having a bearish effect on the market. Additional selling pressure came with last week's announcement from the Commodity Futures Trading Commission about an investigation into possible price manipulation in oil futures markets. The commission also announced new rules designed to increase transparency of U.S. and international energy futures markets.

"There are more concerns on the high pricing we have seen, that it will have a negative impact on demand, and the fact that the CFTC is expanding its investigation of manipulation in the oil markets," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "The seesaw we've seen in the last few days is an indication that the oil market may have peaked," Shum said. "Having said that ... the reality is that even though we have crude off the peak of $135 there are still supply-side issues going forward," he said. "The hurricane season is certainly one factor to contend with."

Tropical Storm Arthur formed Saturday afternoon, one day before the official start of the 2008 Atlantic Hurricane season, and though it caused the temporary closure of two of Mexico's oil export ports, it wasn't expected to cause any severe disruptions to oil shipments. On Sunday, the storm weakened to a tropical depression. "Tropical storm Arthur, the first of this season, gave more support to the market," said a research note by JBC Energy in Vienna, Austria.

Investors also had other supply worries on their mind. On a trip to the Mideast over the weekend, U.S. Treasury Secretary Henry Paulson said there is "no quick fix" to high oil prices because it is an issue of supply and demand. He was on the trip to deliver a message to officials of Saudi Arabia and other oil-producing nations that soaring oil prices are putting a burden on the global economy.

Global demand remains strong while "production capacity has not seen new development," Paulson said Sunday in Qatar. His trip was designed to urge Mideast producers to allow more outside investment to boost output. The day before, though, the current president of the Organization of Petroleum Exporting Countries again blamed the weak U.S. dollar, speculation and the subprime crisis for the spiraling price of oil. Algerian Energy Minister Chakib Khelil said the cartel will make no new decision on production levels until its Sept. 9 meeting in Vienna. He said oil's record prices do not reflect markets conditions, an oft-repeated OPEC position.

As you can see from the various points made here, most of the blame for high energy prices is being blamed on the weakened dollar and global demand. If global demand falters as it has in the US, the resulting supply increase could be just the stimulus to send oil prices tumbling. This would also result in a strengthened dollar against global currencies, which is probably the most important factor necessary to bring relief from high oil prices. Unfortunately, any supply disruptions will bring the oil bulls out in force.

John Kaighn

Jersey Benefits Advisors

Web Business Review

The Chicken Or The Egg

2008-05-29T07:00:00.000-04:00

Oil continues to dominate the headlines, as recent price spikes followed by a $10.00 per barrel decline from its high, reignite discussion about fundamentals. Having witnessed the significant decline in automobile traffic at the Jersey Shore firsthand over the Memorial Day weekend, it is quite evident consumers are cutting back. Traffic on the corridor from Philadelphia to Atlantic City was subdued and nowhere near the usual holiday volume.

Meanwhile, the stock market seems to be trading in a range between 12,200 and 12,800 with no compelling reason to break from this range. With the verdict on recession inconclusive at best, politicians are scrambling to use any definition, even a revised 0.9% growth rate in GDP for the first quarter, as a way to save face. Most major candidates have already come out and pronounced the economy in recession, when in fact, we are not even close to delivering two full quarters of negative growth. It just amazes me how loosely the true definition of recession is contorted for political purposes. While there is no doubt that the current rate of GDP growth causes pain, the economy was NOT in recession during the first quarter of 2008.

Inflation pressures, due to the dramatic rise in the price of crude oil are now being felt throughout the economy. The Fed can't lower interest rates any further, because it makes the dollar less attractive as a currency. This in turn causes the price of oil to rise as investors seek crude oil as a hedge against the debased dollar. The drop in the value of the dollar, coupled with the rise in the price of crude, which permeates every facet of our economy, creates an expectation of higher prices, which is the very definition of inflation. The only way to break this cycle is an economic slowdown or raising interest rates. The question is which will come first, the chicken or the egg?

John Kaighn

Jersey Benefit Advisors

Web Business Review

The Pause That Refreshes?

2008-05-03T10:30:00.002-04:00

On Wednesday the Fed cut rates by another quarter point to 2%, lower than they've been since 2004. Year-to-date, prime rate cuts have been bigger and faster than they have for decades. The market response was initially enthusiastic but flagged by day's end on concerns that this cut would be the last for a while. The Fed's language hinted that more cuts might not be needed, but unfortunately it sounded to much of the market like more cuts might not be possible. And that's a fair concern. Bernanke's (and our) problem is that money can't get much cheaper without causing a slew of undesirable effects, so at a certain point we can't rely on the Fed for stimulus any longer.

John Kaighn

Jersey Benefits Advisors

Web Business Review

Perhaps It's A Housing and Financial Company Recession!

2008-04-18T16:28:00.004-04:00

Today Citi announced another loss, $5.1 billion on top of last quarter's $9.8 billion, nearly all of it a result of credit and real estate. In response, Vikram Pandit is expected to cut 9,000 jobs at Citi in the next few months on top of the 4,200 already announced. Some analysts are predicting total job cuts at Citi rising as high as 25,000 in the next few quarters. On Thursday, Merrill Lynch reported a $2 billion loss and said it would cut 4,000 jobs, many from its S&T and IBD divisions. At JPMorgan the cost is estimated at over 10,000 jobs, mostly from its purchase of Bear Stearns. What's the total job toll of the credit crunch? This week's news brings it to over 40,000.

However, Wall Street topped off a strong week with a big rally Friday, after results from companies like Citigroup Inc. and Google Inc. helped ease investor anxiety about the health of corporate profits. The major stock indexes at times rose more than 2 percent. Investors have been worried that recent data indicate a slowing economy, which would cut into profit growth at some of the nation's biggest companies. But, results so far have shown that earnings, for the most part, are meeting or beating expectations, and the major indexes all posted gains of more than 4 percent for the week.

This has been the first full week of earnings reports, and all of the major companies, especially IBM, came in with results which were in line with or slightly ahead of expectations. While many analysts have been saying the economy has been in recession since the beginning of the year, there is still no definitive consensus that this is the case. The beginning and end points of recessions are determined in retrospect, so all we can do at this juncture is plan for the worst and perhaps if there is a recession it will be shallow. Meanwhile, enjoy the good week, but be ready for more volatility going forward as the various forces which drive the market struggle for the upper hand.

John Kaighn

Jersey Benefits Advisors

Web Business Review

Guidance Website

Obama and Clinton Debate Media Reactions

2008-04-17T14:26:00.002-04:00

Reprinted from The Moderate Voice

April 16th, 2008 by JOE GANDELMAN, Editor-In-Chief

So who won the Pennsylvania Democratic presidential primary between rival Senators Hillary Clinton and Barack Obama?

While the “official” media consensus has yet to come in at this writing, monitoring live streaming, live blogging and early stories on the debate suggest it wasn’t Obama’s best night (possibly his worst debate performance), Clinton continued effectively and relentlessly on the attack — and ABC and the debate moderators will come under fire from Obama supporters and perhaps others due to the first 45-minutes being questions that basically put Obama on the defensive. One question asked was reportedly raised by conservative talk show Sean Hannity.

But even so even some of his supporters now wonder why Obama didn’t seem better prepared.

For a reaction to the debate itself, READ THIS earlier post by TMVer Jazz Shaw. In a move unusual for a news event such as this, ABC embargoed the debate for delayed viewing on the West Coast. This post is a roundup of website and blog reaction to the debate.

One of the best, least emotional live blogging accounts of the debate can be found on USA Today’s blog. Here are some extensive quotes from weblogs, news sites and stories on the debate:

–Andrew Sullivan:

It was a lifeless, exhausted, drained and dreary Obama we saw tonight. I’ve seen it before when he is tired, but this was his worst performance yet on national television. He seemed crushed and unable to react. This is big-time politics and he’s up against the Clinton wood-chipper. But there is no disguising the fact that he wilted, painfully.

Clinton has exposed herself in this campaign as one of the worst shells of a cynical pol in American politics. She doesn’t just return us to the Morris-Rove era, she represents a new height for it. If she somehow wins, it will be a triumph of the old politics in an age when that is exactly what this country cannot afford. But Obama has also shown a failure to be resilient in this grueling process. In some ways, I’m glad. No normal reasonable person subjected to the series of attacks on his integrity, faith, patriotism, decency and honesty would not wilt. And we need a normal reasonable person in the White House again. But this is still the arena we have. It is what it is. ABC News is what it is. The MSM knows no other way. Obama has to survive and even thrive under this assault if he is to win. He failed tonight in a big way.

And so this was indeed a huge night for the Republicans, and the first real indicator to me that Clinton is gaining in her fundamental goal at this point: the election of John McCain against Barack Obama. How else will she rescue the Democrats from hope?

–The Politico’s Ben Smith:

So, who won, who lost, how did Obama hold up under what was basically a public enactment of Clinton’s case against him.

AND: Didn’t those quotes from the Constitution really set the tone?

ALSO: How much money will Obama raise off his supporters’ perception that this debate was unfair?

–Americablog:

Wow. What the hell was that? Seriously, I’m a bit stunned. The level of discourse has reached a new low — a very new low. To be clear, I don’t think the debate was a disaster for Obama. He did fine. I think it was a disaster for our political system.

It was the worst debate ever. [ABC moderators Charles] Gibson and [former Clinton administration spokesman George] Stephanopoulos were horrible. The questions were literally right out of right wing talk radio.

–The Swamp:

Well, what we saw tonight was Hillary Clinton making a strong, last-ditch effort to pull her flagging campaign back from brink, get it back on track to victory on April 22 and make the superdelegates realize that she really is their last best chance to retake the White House.

She drummed on Obama not just for his remarks about small towns, guns and religion, but for his vast dearth of experience compared to hers–and that includes her experience of being ravaged by Republicans and living to see another day.

Obama, for his part, strove to defuse the negative ripples his aforementioned-ad-nauseum remarks might have engendered, not to mention the controversial comments of his former pastor–all of which appear not to have tarnished him much in polls.

Most importantly, he tried to get voters to imagine him as commander-in-chief, assigning “a mission” to his commanders–he’s the decider–although consulting with them re: tactics.

….And, for Hillary Clinton to get so giddy about the Wright question was really just sad. She was the official purveyor of fringe talking points. Shockingly so. And, she seemed to enjoy it. There’s a reason people think Clinton is dishonest as we saw today in the findings of the Washington Post-ABC News poll. She’s not only in this to win, she’s in it to win dirty — and to destroy Obama. She invoked Louis Farrakhan tonight for no reason — just to say it. Give me a break. Throughout this campaign, Clinton has pursued GOP attacks against Obama. He has not gone there against her.

–Daily Kos (one of several progressive sites calling on readers to flood ABC News with protests):

I used to think Republican operative and Karl Rove mentor Lee Atwater had died in 1991, after a nasty career of Republican race baiting, culture wars, dirty tricks, and a illness-induced conversion to Catholicism and public repentance for his dirty and divisive politics. I was wrong.

Lee Atwater apparently works for ABC News in devising…questions to ask Democratic Presidential candidates.

The questioning in tonight’s debate–—mostly straight out of 1988—was an abomination. Gun control. 60’s radicalism. Inflammatory black pastors. Respecting or disrespecting the flag. Taxes. Being out of touch with the military. Affirmative Action.

I’ll bet if they had more time, ABC anchors Charles Gibson and George Stephanopolus would probably have gotten around to asking Obama and Clinton about Willie Horton….The questions asked were not the kinds of questions Democratic primary voters care about. But they are the “gotcha” kinds of questions Republicans try to spring on Democrats in general elections.

I’m not afraid of those questions. I think Obama did fine tonight. Generally Clinton has performed best in debates, but as we first saw in the Texas debate, Obama appears to perform better one-on-one. I especially liked how he refused to get lured in to Charles Gibson’s conservative frames, and I like how he dismissed many of Clinton’s attacks on him as avoiding the substantive issues and hypocritical, as when he pointed out that Bill Clinton pardoned members of the Weather Underground.

–Hot Air’s Ed Morrissey feels the debate was “Obama’s Waterloo”:

The last Democratic debate has finally concluded, and perhaps the last chances of ending the primaries early. Thanks to a surprisingly tenacious set of questions for Barack Obama and Hillary Clinton from ABC moderaters Charles Gibson and George Stephanopolous, Barack Obama got exposed over and over again as an empty suit, while Hillary cleaned his clock. However, the big winner didn’t even take the stage tonight.

…The winner of this debate? John McCain. Both Democrats came out of this diminished, but Obama got destroyed in this exchange. If superdelegates had begun to reconsider their support of Obama after Crackerquiddick, they’re speed-dialing Hillary after watching Gibson dismember Obama on national TV tonight. And kudos to ABC News for taking on both candidates fearlessly. John McCain has to feel grateful not to be included.

–Josh Marshall:

9:46 PM … No Charlie. It hasn’t been a “fascinating debate.” It’s been genuinely awful.

9:50 PM … What happened to the League of Women Voters? Can we give the debates back to them? This sort of episode really sickens me. KB’s point above is sadly accurate. It’s stuff like this that really makes me think that whole big chunks of the established press needs to be swept away.

9:56 PM … As I noted above, I missed roughly the first half hour of this debate. But from what I heard about those thirty minutes and what I saw of the subsequent ninety minutes was basically debate by gotcha line with basically no discussion of any of the big questions the election is turning on.

–National Review’s Jonah Goldberg:

I’m no leftwing blogger, but I can only imagine how furious they must be with the debate so far. Nothing on any issues. Just a lot of box-checking on how the candidates will respond to various Republican talking points come the fall. Now I think a lot of those Republican talking points are valid and legitimate. But if I were a “fighting Dem” who thinks all of these topics are despicable distractions from the “real issues,” I would find this debate to be nothing but Republican water-carrying.

–Marc Ambinder:

Keeping the score card, there’s no way Obama could fared worse. Nearly 45 minutes of relentless political scrutiny from the ABC anchors and from Hillary Clinton, followed by an issues-and-answers session in which his anger carried over and sort of neutered him. But Hillary Clinton has a Reverse-Teflon problem: her negatives are up, and when she’s perceived as the attacker, the attacks never seem to settle on Obama and always seem to boomerang back on her. So it would be unwise to declare that Hillary “won” the debate in the dynamic sense just yet. (How much money will Obama raise off this debate? $3m million? $4 million?)

…..This sets up a blowback scenario wherein his supporters will rally to his defense and lash out at the media very loudly. But Obama’s going to be the next president of the United States, maybe. The most powerful person in the world. And questions about his personal associations, his character, his personal beliefs, his statements at private fundraisers — the answers to these questions tell us a lot. Sometimes the questions are unfair (( — nothing about Colombia and Mark Penn — )), but this ain’t Pop Warner; the artificial distinction between politics, personality and policy doesn’t exist in this league, and if you’re uncomfortable with it, then change the rules or don’t run for office.

–My DD’s Todd Beaton:

Although it was somewhat redeemed in the final half hour, I feel like taking a shower after that debate. It was tabloid hour on ABC, and certainly Obama did get the bulk of the more disgusting questions. Check out this post over at ABCNews.com: over 4,000 comments, the bulk of which seem to just rip ABC.

As for the candidates’ performances, neither was particularly inspiring and neither had his or her best night, although Obama did get plenty of opportunities to plead for an end to the issues of distraction and division and to call for a new style of politics and seemed to be the conscience of the audience as he called out the moderators. I think Clinton was stronger during the last half hour but not enough to tip the balance in her direction; certainly not enough for this to be a game changer.

It would almost be a shame for this to be the last debate, to go out on such a poor note.

–Chris Bowers:

Halfway through the debate, not a single question on any policy issue had been asked, it was obvious that this debate was prime-time hit job on Obama. The questions so far have been why he doesn’t wear a flag pin, whether or not his pastor loves America, why he can’t win, and how many people were offended by his bittergate comments. Except for Clinton being asked about why she wasn’t trustworthy, and both of them being asked about their vice-presidential choices, that has been the entire debate.

…..It appears that live focus group polling of undecideds favored Obama during the first round of questions that basically was a series of hit-jobs against him, while Clinton polled better in the focus group when it shifted to issues in the second half. Hmmm… perhaps her campaign should learn something from that.

–NBC’s Chuck Todd:

This debate is going to lead a lot of Obama supporters to ratchet up the calls on Clinton to either withdraw or tone down the attacks. Clinton supporters will point to this debate as proof that he’s not yet ready for the general, that’s why she should stay in, and that’s why superdelegates should overturn the winner of pledged delegates.

Overall, with the spotlight on him very bright, Obama didn’t step up. He got rattled early on and never picked his game back up. Clinton wasn’t very warm (outside of he first few minutes), but she didn’t have the spotlight on her very bright. And as we’ve noted in “First Thoughts” quite a few times, whenever the spotlight is on one candidate, the other seems to benefit. Tonight, the spotlight was on Obama, and for a short period of time, I expect Clinton to benefit. But the question is whether she can sustain any benefit since as the negativity goes on, she pays a bigger price than Obama. Let’s see what the PA Dem voting public decides in six days. A big Clinton victory and this debate will be seen as an important turning point, a narrow victory (less than five points) and she could find herself facing more calls to get out.

Could tonight’s true winner be John McCain? We’re betting that’s the unanimous pundit scoring tonight.

–Monica Crowley:

The final two Democratic candidates appeared to sleepwalk through tonight’s debate. I mean, quite literally, they looked so weary that they appeared to be napping while the other was talking. They swayed. They leaned on the podium. Their eyelids were heavy. Their speech was slow and deliberate, each response called up on auto-pilot.They moved as if through molasses.

They both survived. There were no earth-shattering gaffes or obvious slurring or devastating mangling of an issue. But to have both candidates looking ready to keel over is an indication of the toll this drawn-out campaign has had on them. A lot of Democrats are making an issue of John McCain’s age (71), but while he’s got 10 years on Hillary and 25 on Obama, McCain looks the most spry.

–Somervell County Salon:

Just got done watching the ABC Debate that was moderated by Charlie Gibson. Where were the questions about Bush’s torture, about executive signing statements, what about that permanent base in Iraq, what about the huge cost of the war, about bailing out investment bankers, about using PPPs (whether from this country or foreign) to lease out our infrastructure, what about the airline industry FAA problem? Nope. Had to listen to right-wing Republican talking points in a DEMOCRATIC DEBATE coming from Gibson and Steph. Now, on the one hand, maybe it’s a good thing because that’s what will happen when Gramps McCain goes head to head with Obama but you know, if I wanted to watch Fox News, I’d unblock it…

P.S. Hillary Clinton has a look on her face in much of the debate that reminded me of the pissy pursed look that Bush had in the second debate against Kerry.

–The Morning Call’s Pennsylvania Ave:

After the debate, both candidates surrogates rushed to the “Spin room” to field questions from a mass of media outlets about the debate.

The take from Clinton spokesman Howard Wolfson was that enough serious questions were raised about Barack Obama in the first half of the debate to give voters second thoughts about his electibility.

“A number of questions were asked really for the first time of Barack Obama,” Wolfson said, putting Obama “back on his heels.”

Wolfson also said he didn’t think Obama’s statements about small town voters who he described as “bitter” and clinging to guns and religion, was a gaffe, but rather “What he believes.”

The Obama campaign countered that most voters were probably frustrated with the first half of the debate, which had very little talk about the issues, instead focusing on political games.

U.S. Rep. Patrick Murphy, D-Bucks, said he thinks voters were more interested in hearing the candidates talk about issues like Iraq and the economy.

–Blue Ollie:

This night’s debate had potential to be very meaningful. Instead, it was a colossal waste of time.

No, I am not saying that because the moderators (including former Clinton official George Stephanopoulos) piled on Obama; I expect that.

It was because the piling on was over the warmed over trivial stuff: stuff Rev. Wright said, a party that Obama may have attended, why he stopped wearing a flag pin, etc. Yes, Clinton caught the Bosnia “sniper fire” question.

….ABC did more to make BHO’s point that today’s politics is petty and insubstantial….But as far as ABC debate: ABC News not a news organization but rather a tabloid organization.

--Ginger Snaps:

FLAG PINS? Is that what George Snuffalufagus thinks is one of the most important topics that needs to be discussed in a Presidential Debate?!?

Seriously, folks…the first 45 minutes of this debate really should have been relegated to Saturday Night Live. We were treated to questions about flag pins, the Rev. Wright issue that Obama has sufficiently addressed ad nauseum, implying that Obama should answer for the acts his friends committed 40 years ago, and, of course, the “b” word…

…and oh by the way, we have an economic crisis, a war, gas prices are through the roof, unemployment, veterans in crisis, a broken healthcare system…

You know…the things that affect us every single day?!?

…How are we going to get the right candidate in office if the media chooses to ask trivial questions that play on the FEAR of the country, when what we really need to know is their detailed plan for how they are going to fix the situation right now?

–Editor & Publisher Editor Greg Mitchell writing on the Huffington Post:

In perhaps the most embarrassing performance by the media in a major presidential debate in years, ABC News hosts Charles Gibson and George Stephanopolous focused mainly on trivial issues as Hillary Clinton and Barack Obama faced off in Philadelphia. They, and their network, should hang their collective heads in shame.

Wars in Iraq and Afghanistan, the health care and mortgage crises, the overall state of the economy and dozens of other pressing issues had to wait for their few moments in the sun as Obama was pressed to explain his recent “bitter” gaffe and relationship with Rev. Wright (seemingly a dead issue) and not wearing a flag pin — while Clinton had to answer again for her Bosnia trip exaggerations.

Then it was back to Obama to defend his slim association with a former ’60s radical — a question that came out of rightwing talk radio and Sean Hannity on TV, but was delivered by former Bill Clinton aide Stephanopolous. This approach led to a claim that Clinton’s husband pardoned two other ’60s radicals. And so on. The travesty continued.

–National Review’s Mark Hemingway declares McCain the winner and writes:

My prediction? The debate will be received so badly there will be increased pressure to kick Hillary out of the race. But since Obama was clearly the worse of the two in the debate, Hillary will win PA as expected and the goat rodeo will continue for the forseeable future with even more acrimony between the two candidates. Which only helps McCain.

–Newsday’s Spin Cycle:

The highlight of the debate tonight will be Hillary’s repeated efforts to use an electability argument as the basis for sharp attacks on Obama over Bittergate, Wright and 1960s radicals.

It was a tactic geared as much to superdelegates as to Pennsylvania voters, and Obama was not as sharp as he could have been in response. He seemed surprised sometimes, irritated others, and misspoke at least once (about disowning Wright, which he quickly corrected). So, if you’re scoring the debate like a prizefight, she wins a couple more rounds. But no game-changing moments.

–The New Republic’s The Stump blog:

For what it’s worth, I thought it was smart for Obama to go gracious on the Hillary-Bosnia scandal and suggest that they’re both entitled to make a mistake every now and then. Obviously, the choice of questions isn’t doing Obama any favors–bittergate, Wright, William Ayers!–but he’s doing a decent (if low-energy) job not getting dragged into the fray,* and Hillary is coming very close to over-reaching by rubbing his nose in it.

–Matthew Yglesias:

I had thought the Clinton campaign couldn’t sink any lower, but thus far she’s really just been giving us the full GOP. Listening to her talk about Barack Obama is like reading a Weekly Standard blog post. The lame excuse that she’s making this and that outrageous smear because the Republicans will do it later is pathetic. Maybe they will. But she’s the one doing it now.

HERE IS A CROSS SECTION OF NEWS MEDIA REPORT REACTION:
–The New York Times:

Senator Hillary Rodham Clinton went on the attack against Senator Barack Obama on a variety of issues during a contentious debate Wednesday, warning that he would be deeply vulnerable in a general-election fight if he won the nomination.

….
–The Boston Globe framed it this way:

Senators Barack Obama and Hillary Clinton took their hard-fought battle for the Democratic nomination down to a deeply personal level in a nationally televised debate tonight, trading barbs on honesty, their appeal to working-class voters, and who would be a stronger candidate in November.

Clinton, struggling to gain momentum in the dwindling weeks of the primary campaign, accused Obama of associating with unsavory people, including his own former preacher, and questioned whether Obama — whom she called “a good man” — could beat the GOP nominee in the fall.

“They’re going to be out there in full force,” Clinton said of the Republicans. “I’ve been in this arena for a long time. I have a lot of baggage and everybody has rummaged through it for years.”

Obama, meanwhile, criticized the New York lawmaker for running a negative campaign, and said Clinton herself could not pass the electability test she was imposing on him.

“By Senator Clinton’s own vetting standards, I don’t think she would make it,” he said.

–The Globe’s blog political intelligence was far more blunt:

Barack Obama tonight staked his presidential campaign on the idea that the American people will look beyond the inevitable gaffes and errors and character attacks of a 24-hour campaign cycle to meet the challenges of a “defining moment” in American history.

Hillary Clinton staked her campaign on the idea that Americans won’t — and that her tougher, more strategic approach to countering Republican attacks is a better way for Democrats to reclaim the White House.

The first half of tonight’s debate in the august National Constitution Center in Philadelphia was a tawdry affair, as ABC news questioners called on Obama and Clinton to address a year’s worth of dirty laundry, and each combatant eagerly grabbed at the chance to befoul their rival a little more.

But while some in the audience groaned, the litany of nasty questions — about such matters as Obama’s comments on the working class and Clinton’s exaggerations about dangers she faced in Bosnia — helped to flesh out a long-simmering subtext to the Clinton-Obama battle: The Clinton campaign’s insinuation that Obama is more vulnerable to GOP-style attacks on his patriotism.

….Clinton wasn’t so high-minded. At times, she seemed to revel in her tough-gal statements, sounding like a character in a 1940s film noir.

….The tit-for-tat comment showed how off-message Obama was for most of the evening, able to conjure up little of the hopeful energy that has marked his campaign for much of the year.

…What did come through, however, was how crucial Obama’s self-described “bet on the American people” will be to the future of his campaign.

Obama has said on countless occasions that he believes the American people want “an honest conversation,” and not a campaign of charges and countercharges.

–The Washington Post’s news report on the debate includes this:

With the race for the Democratic presidential nomination mired in a form of trench warfare that has left party leaders searching for a way to bring it to a conclusion before the party’s late-summer convention, Clinton (N.Y.) and Obama (Ill.) began their first head-to-head encounter in nearly two months focused on political disputes rather than their relatively narrow policy differences. Obama, who leads in the delegates needed to claim the nomination, fielded tough questions about his relationship with his former pastor, his patriotism and his description of small-town voters as “bitter,” the latter a controversy that has engulfed his campaign for much of the past week.

Obama argued repeatedly that voters are smart enough to differentiate petty issues from important economic matters.

“So the problem that we have in our politics, which is fairly typical, is that you take one person’s statement, if it’s not properly phrased, and you just beat it to death,” Obama said. “And that’s what Senator Clinton’s been doing over the last four days. And I understand that. That’s politics. And I expect to have to go through this process. But I do think it’s important to recognize that it’s not helping that person who’s sitting at the kitchen table who is trying to figure out how to pay the bills at the end of the month.”

–The Washington Post’s The Fix blog:

The choice between the candidates crystallized tonight. It is not, fundamentally, a choice about issues or even ideology — it is a choice about approach. Obama is an idealist, using nearly every question to appeal to the better angels in people; Obama sees the world as he wants it to be and believes he can make it. Clinton, on the other hand, is an unapologetic pragmatist; she has been through the wringer that is national politics before and knows how to play the game.

*The longer the Democratic campaign goes on, the more clips Republican Sen. John McCain’s campaign can harvest for use against the eventual Democratic nominee. It’s one thing for McCain to take note of ties between Obama and a former member of the Weather Underground; it’s quite another for McCain’s campaign to roll tape of Clinton making those accusations. You can bet Steve Schmidt of McCain’s campaign was Tivoing every minute of tonight’s proceedings for use when summer turns to fall.

John Kaighn

Jersey Benefits Advisors

Web Business Review

Guidance Website

Jersey Benefits Advisors Newsletter Spring 2008

2008-04-06T14:14:00.005-04:00

Market Watch

After months of downbeat news and the housing, credit and stock markets being pummeled almost daily, the first quarter of 2008 ended with a positive whimper and the second quarter began with a surge. Whether or not the positive signs continue will depend on the statistical information forthcoming in regard to the economic cycle. In the mean time, we’ve closed the books on the first quarter, and while the news seemed quite dire for much of the time, the DJIA and S&P 500 haven’t reached bear market levels.

The Dow Jones Industrial Average ended the first quarter at 12,262.89 down 7.6%, while the S&P 500 finished at 1,322.70 shedding 9.9%. The NASDAQ actually hit bear market territory (20% decline) during the quarter, but closed at 2279.10 which was 14% lower than where it started the year. Considering all of the headwinds the markets faced during the winter, the damage has been minimal thus far.

Of course, it is far from apparent if the carnage in the various markets is over, since we don’t even have a definitive answer on whether or not the economy is in recession. The latest GDP numbers indicated extremely slow growth, just .6% for the fourth quarter of 2007. The first estimate of GDP growth for the first quarter will be provided at the end of April.

While many economists felt the economy would avoid recession this year, when polled at the beginning of the year, the debate has shifted to how long and how deep the downturn will be. Officially, a recession is the contraction of GDP for two consecutive quarters. The length of the recession represents the trough or bottom of the economic cycle from which a new economic cycle begins.

The wild card right now is the stimulus the Federal Reserve has injected into the credit markets, which have been paralyzed due to the fiasco created by the housing debacle and subprime mortgage mess. The results of some of the Fed’s actions are already being felt, as banks and investment firms have utilized the Federal Reserve as the bank of last resort. While this is a function of the Federal Reserve for banks, opening the discount window to investment firms is something that hasn’t been done since the 1930’s.

Chairman Bernanke has taken some drastic steps with monetary policy to shore up the financial system, and his study of the blunders made during the Great Depression have been quite evident. Fiscal stimulus, like the rebates headed our way this quarter, will also be felt later this year. Whether the stimulus will be enough to keep the economy out of recession remains to be seen.

Of course the politicians are having a field day recommending bailouts of mortgage holders, job programs, protectionism, taxes on “big oil” and more regulation. Most of the programs being championed will not have the slightest chance of implementation, but they make great sound bites to constituencies during an election year. A huge “shot over the bough” was fired by Treasury Secretary Henry Paulson with his proposal to streamline US financial regulation. It should encourage debate for months!

Finally, it is sufficient to say that if you are like me and believe the sun will shine again tomorrow, this particular phase of the economic cycle represents a buying opportunity. All markets are the same, and when there is a 10% - 15% sale, it is time to buy.

What Happened to Bear Stearns’ Client Accounts?

With the demise of such a large investment firm as Bear Stearns so prominently discussed in the news, many investors have asked what happens to the client accounts held at the firm. Client accounts are insured by the Securities Investor Protection Corporation (SIPC) for $500,000 per account but only $100,000 can be cash, the remainder must be in securities.

In the case of Bear Stearns, the company will more than likely become part of a division of JP Morgan Chase and Bear Stearns’ client accounts remain unaffected. SIPC involvement was not necessary. Bankruptcies of securities firms usually result in client accounts being transferred to another firm. Client accounts of brokers, such as Transamerica, are held by a third party (Pershing) which segregates client assets.

Ways To Protect Assets During Market Turmoil

A bright spot during this particularly gloomy period in the markets has been the performance of the variable annuities developed after the dotcom bubble. Insurance companies responded to the market turmoil from 2000 - 2002 by developing living benefits, which could be used to protect assets from significant downside risk. While many acronyms have been used to describe the various riders companies have developed, the main theme is to allow participation in market gains through separate accounts, and also guarantee a minimum amount of asset appreciation each year, which is usually 5% or 6%.

Each year the principal (amount invested) basically has two calculated values. The market value is the amount invested plus whatever gains are made in the separate accounts during the year. The withdrawal value or guaranteed value is the amount invested plus the rider’s guaranteed appreciation, which is the 5% or 6% discussed above. If the market declines, the client knows the amount which can be withdrawn for retirement will still increase by the 5% or 6%. If the market increases 10% or 15%, then the client can withdraw even more during retirement. Newer versions of these variable annuity riders allow a step up of the market value on an annual and even monthly basis, reducing downside risk even more effectively.

While there are fees charged by the insurance companies for annuities and their living benefits riders, they are quite reasonable when compared to the downside risk protection they provide. If market risk to principal is a concern, as it is to many investors approaching retirement, the peace of mind provided by a variable annuity may be worth the additional expense. Mutual funds are a less expensive way to participate in the various markets, but they provide no downside protection.

Variable annuity fees don’t even begin to compare to the whopping fees charged by hedge funds, which are supposed to be inversely correlated to the stock market. Unfortunately, this inverse correlation has not held up during this market cycle as hedge funds have been imploding under the weight of subprime mortgage debt. In fact, the demise of Bear Stearns was due to the default of two of their hedge funds, which went belly-up during the summer.

An analysis of my clients’ accounts who have invested in a variable annuity since 2002 showed the market value higher than the guaranteed value for the most part. The few clients whose market value was less than the guaranteed value, made recent large investments in 2007. Everyone has a higher account value than the amount invested and are breathing a bit easier these days.

If you feel a variable annuity is worth discussing for your investments, be sure to contact me.

COMPANY INFORMATION:

Investment Advisory Services offered through:
Jersey Benefits Advisors
P.O. Box 1406
Ocean City, N.J. 08226
Phone: 609 827 0194
Fax: 609 861 9257
Email: kaighn@jerseybenefits.com
Http://www.jerseybenefits.com

Securities offered through:
Transamerica Financial Advisors, Inc.
A registered Broker/Dealer
1150 S. Olive St. Suite T-25
Los Angeles, CA 90015
800-245-8250
Member FINRA & SIPC

Third Party Administration and Insurance Services offered through:
Jersey Benefits Group, Inc
P.O. Box 1406
Ocean City, N.J. 08226
Phone: 609 827 0194
Fax: 609 861 9257
Email: kaighn@jerseybenefits.com
Http://www.jerseybenefits.com/

John Kaighn

Jersey Benefits Advisors

Web Business Review

Plug In Profit

John Kaighn's Guidance Website

What Happens to Bear Stearns' Client Accounts?

2008-03-29T14:21:00.006-04:00

With the demise of Bear Stearns, many investors are rightfully asking what happens to client accounts held at the firm. Client accounts are segregated from the assets of the firm and insured by the Securities Investor Protection Corporation (SIPC) for $500,000 in securities per account. Only $100,000 in cash is insured. If the firm were to file for bankruptcy, the client accounts would be transferred to another broker/dealer. However, in the case of Bear Stearns, the firm's client accounts will more than likely remain with Bear as a division of JP Morgan Chase.

The SIPC doesn't insure against losses in the value of securities, but rather against loss due to malfeasance. As is usually the case with securities firms that run into difficulty, SIPC insurance is rarely utilized. Instead, the securities held by clients are generally transferred to another broker/dealer that agrees to purchase the client accounts. Since client accounts are a valuable asset, there is usually no problem finding another broker/dealer ready to step in to service those accounts. This usually doesn't take long, as evidenced by the case of MJK Clearing, a Minneapolis brokerage firm that failed in 2001. Within a week, most clients were able to access their accounts after the assets were transferred to another firm.

In the case of our firm, Transamerica, client accounts are held by a third party clearing firm. The name of that firm is Pershing. The accounts are segregated from the assets of Transamerica and held in the client's name. Should there ever be any problem with the solvency of Transamerica, as in the case of MJK Clearing, client assets would continue to be held at Pershing until another broker/dealer stepped in to service those accounts. Protection of the client is of utmost importance to all of us in the securities industry, because client confidence is paramount to our success and survival.

John Kaighn

Jersey Benefits Advisors

Web Business Review

Plug In Profit

John Kaighn's Guidance Website

Stock Market Swings To Continue

2008-03-19T07:39:00.004-04:00

Look for continued wild swings in the market for the foreseeable future as the current economic situation works itself out. At this juncture the Federal Reserve has committed to shoring up the financial system and mitigating the effects of a deceleration in economic growth. The current consensus of economists is that the US is in recession, or very close to it. While the definitive answer to the recession question will be confirmed after the fact, the Fed has seen enough downside risk to the economy to cut the Federal Funds rate to 2.25%, but has also stated that inflation is a concern.

Fed chairman Ben Bernanke, who studied The Great Depression in detail, feels one of the foremost causes of the prolonged downturn in the 1930's was the central bank's reluctance to lower interest rates. Unfortunately, when the Fed takes this type of action, the dollar becomes weaker and inflation becomes a very real risk. While last month's inflation news was muted, there are fears the renewed speculation in commodities, especially oil, will ignite another round of inflationary pressures. It is too soon to know if the Fed moves and the stimulus plan implemented by the Legislative and Executive branches of the government will stave off recession. There are concerns that the increased stimulus may actually overheat the economy in the second half of the year.

While the markets have been in a bit of a panic mode recently, Bernanke and company have taken the right steps to handle the crisis. If inflation begins to accelerate and global demand for commodities doesn't subside, look for the Fed to stop lowering rates and begin to raise them in the second half of the year. My guess is the Euro and other currencies, which have strengthened against the dollar, will weaken considerably as the global slowdown begins to take hold. Just as the stock markets of the world have not decoupled from the US stock market, the global economies and consequently their currencies have also not decoupled from the dollar.

John Kaighn

Jersey Benefits Advisors

Web Business Review

Plug In Profit

John Kaighn's Guidance Website

How the Federal Reserve Battles Recession

2008-03-07T14:37:00.004-05:00

Historically, capitalistic societies have gone through boom and bust cycles on a regular basis. The economic good times are enjoyable for everyone involved, but sometimes the exuberance can lead to downturns which are often painful. The Federal Reserve was created to help moderate the effects of an economic contraction and was given some powerful tools to affect the money supply and keep the economy out of recession.

The establishment of a Central Bank went through many convolutions prior to becoming a non partisan guardian of monetary policy. During the American Revolution, the Continental Congress printed the new nation's first paper money, known as "continentals”. Later, at the urging of Treasury Secretary Alexander Hamilton, Congress established the First Bank of the United States, headquartered in Philadelphia, in 1791. By 1811, with a backlash toward the large banking establishment brewing, the bank's 20-year charter expired and Congress refused to renew it by one vote.

By 1816, Congress agreed to charter the Second Bank of the United
States, but Andrew Jackson, a central bank foe, was elected president in 1828 and he was successful in allowing the charter to expire. State-chartered banks and unchartered "free banks" took hold and began issuing their own notes, redeemable in gold. The New York Clearinghouse Association was established in 1853 to provide a way for the city's banks to exchange checks and settle accounts.

During the Civil War the National Banking Act of 1863 was passed, providing for nationally chartered banks, whose circulating notes had to be backed by U.S. government securities. Although the National Banking Act of 1863 established some measure of currency stability for the growing nation, bank runs and financial panics continued to plague the economy. In 1893 a banking panic triggered the worst depression the United States had ever seen, and the economy stabilized only after the intervention of financial mogul J.P. Morgan.

In 1907 a bout of speculation on Wall Street ended in failure, triggering a
particularly severe banking panic. The Aldrich-Vreeland Act of 1908, passed as an immediate response to the panic of 1907, provided for emergency currency issues during crises. It also established the National Monetary Commission to search for a long-term solution to the nation's banking and financial problems. By December 23, 1913, when President Woodrow Wilson signed the Federal Reserve Act into law, it stood as a classic example of compromise -- a decentralized central bank that balanced the competing interests of private banks and populist sentiment.

Originally, the mandate of the Federal Reserve was not envisioned as an entity which would utilize an active monetary policy to stabilize the economy. The idea of using an economic stabilization policy only dates from the work of John Maynard Keynes in 1936. Instead, the founders viewed the Fed as a means of preventing the supplies of money and credit from drying up during economic contractions, as often happened prior to World War I.

The central bank’s function has changed since the days of the Great Depression, and the Fed now primarily manages the growth of bank reserves and money supply to help stabilize growth during expansions. In order to control the money supply, the Fed uses three main tools to change bank reserves. These tools are a change in reserve requirements, a change in the either the discount rate or the federal funds rate, and the use of Open-market operations.

Changing the reserve ratio is a seldom used, but quite powerful tool at the Fed’s disposal. The reserve ratio is the percentage of reserves a bank is required to hold against deposits. A decrease in the ratio will allow the bank to lend more, which will increase the supply of money. An increase in the ratio will have the opposite effect.

One of the principal ways in which the Fed provides insurance against financial panics is to act as the "lender of last resort", one of the tools used recently as the subprime mortgage debacle led to a credit crunch in the summer of 2007. When business prospects made commercial banks hesitant to extend credit, the Fed stepped in by lending money to the banks, thereby inducing banks to lend more money to their customers. The Federal Reserve does this by lending at the discount window and changing the discount rate.

The federal funds rate is the interest rate that banks charge each other. The federal funds rate target is decided at Federal Open Market Committee (FOMC) meetings. Depending on their agenda and the economic conditions of the U.S., the FOMC members will either increase, decrease, or leave the rate unchanged. It is possible to infer the market expectations of the FOMC decisions at future meetings from the Chicago Board of Trade (CBOT) Fed Funds futures contracts, and these probabilities are widely reported in the financial media.

The Federal Reserve’s open-market operations consist of the buying and selling of government securities by the Fed. If the Fed buys back issued securities (such as Treasury Bills) from large banks and securities dealers, it increases the money supply in the hands of the public. The Fed can decrease the supply of money when it sells a security. The monetary expansion following an open-market operation involves adjustments by banks and the public. When the Fed buys securities from a member bank, the bank’s reserves increase, thereby encouraging it to lend . When the bank makes an additional loan, the person receiving the loan gets a bank deposit. These actions cause the money supply to increase by more than the amount of the open-market operation. This multiple expansion of the money supply is called the money multiplier.

Today, the Fed uses its tools to control the supply of money to help stabilize the economy. When the economy is slumping, the Fed increases the supply of money to spur growth. Conversely, when inflation is threatening, the Fed reduces the risk by shrinking the supply. While the Fed's mission of "lender of last resort" is still important, the Fed's role in managing the economy has expanded since its origin. As we near the end of the first quarter of 2008, the Fed has been lowering interest rates because the threat to growth has taken precedence over the Fed’s concern about inflation. Therefore, at this juncture, the Fed is working to keep the economy out of recession and attempting a "soft landing".

John Kaighn

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Commodity Express

2008-03-01T09:14:00.006-05:00

In his testimony before Congress on economic conditions, Fed Chairman Ben Bernanke stated, "It is important to recognize that downside risks to growth remain." This was taken as a signal that the Fed will once again be lowering interest rates at the March FOMC meeting. This sent the dollar to new lows against the Euro and commodities prices soaring as gold futures approached $1,000 an ounce and oil futures rallied to $102.59 a barrel. Are we seeing the froth of another bubble, this time in commodities, as the speculators (who never quite seem to learn their lesson) seek to find yet another way to get rich quick?

Recently, economists and investors completely debunked the notion that the major economies of the world may have decoupled from the US economy. Yet the very idea that commodity prices will continue their dizzying upward spiral despite a slowdown in the US economy would almost indicate some denial going on here. Since a slowdown in the US would bring about lesser demand for foreign and domestic goods, which in turn will slow production in foreign countries, which will mean less money to purchase goods (which are made from commodities), it seems in the very near future the direction of oil and other commodities may be down.

Inventories of gasoline and heating oil have been higher than anticipated and winter is almost over. As gasoline hovers at $3.00 a gallon and threatens to go to $4.00 a gallon, can a slowdown in consumption be far behind. At this point, OPEC has not cut production, and why would they? At $100 a barrel their greed overwhelms their business sense, much as the builders, mortgage brokers and banks during the run up to the housing correction. It's no wonder consumer confidence fell in February to the lowest level in 17 years. All of this, and we are not even sure we are in a recession yet. Let's just hope the most recent homeowner bailouts being contemplated by Congress never get out of committee, or we could take a slowdown and create a disaster.

John Kaighn

John Kaighn's Web Business Review

Plug In Profit

Jersey Benefits Advisors

John Kaighn's Guidance Website