The US markets opened lower today, as investors digested the overnight news from China. Stocks in China were down sharply on Wednesday because the government raised a tax on stock trades. The reason for this tax increase is an attempt to dampen some of the enthusiasm for stocks, due to a market boom. There are growing concerns about a possible bubble.
The main Shanghai Composite Index dropped 6.5 percent to 4,071.27 after hitting a record high on Tuesday. The Shenzhen Composite Index for China's smaller secondary market closed at 1,199.45 a decline of 7.2 percent. The market plunge came on the heels of an announcement by the Finance Ministry that tripled the "stamp tax" on stock trades from 0.1 percent to 0.3 percent. The change was effective Wednesday, as the the official Xinhua News Agency reported the ministry was trying to "cool the stock market".
The last time stocks plunged in China, which was February of this year, emerging markets took it on the chin. Stocks in the US and other mature markets also swooned as investors reacted to the news. Anytime you have a precipitous drop in a major market, there are bound to be ripple effects in all of the world's markets. One thing to remember is the fact that the markets do not move in a straight line, so after a period of increasing share prices, one has to expect a decline sooner or later. Hopefully, this will not be a correction that reclaims all of the gains made this year, but it is a distinct possibility. If you have a few dollars sitting on the sidelines, this may present an opportunity to buy shares at a lower cost. For those of you who continually dollar cost average, you will automatically reap the benefits of any sale on shares.
Later in the day, the US markets responded to the release of the FOMC minutes, as the S&P 500 index advanced to its first record close in more than seven years ending at 1,530.23. Investors concluded from the Fed report the evidence of a cooling economy might be a reason for the Federal Reserve to begin cutting interest rates in the second half of the year. The DJIA also closed in record territory at 13,633.08 as the markets shrugged off the news from China. Sometimes you just never know how the market will react to news, which is why I always recommend not letting emotion rule your investment decisions.
For More Information on Investments and Business Information and Opportunities, visit my websites:
http://jerseybenefits.com
http://johnkaighn.com
Wednesday, May 30, 2007
Friday, May 25, 2007
Remember the Point of the Holiday
A friend emailed me and commented that I write a lot about the markets and investments, but wanted to know if I had any other interests. So for anyone who might be interested, I love the beach, especially reading while relaxing. I'm also into boating and gardening, as well as walking and doing my daily workout. Well, that's enough about me! I hope you all have a great Memorial Day holiday, and if you are down here in South Jersey, enjoy our beaches and boardwalks. Also, take a few minutes during your weekend to remember the reason for the holiday. There are many young men and women in harm's way, and many who have given their lives in defense of this country, throughout its history. Take some time to reflect on their sacrifices, be safe on the highways and have a wonderful weekend.
The S&P 500 still has not broken through the record we've talked about for two weeks now. It made it to within 2 points of 1,527.46 earlier this week, but closed out at 1,515.73 today. The Dow ended the week at 13,507.30 and the NASDAQ closed at 2557.20 ending a lackluser trading week. The markets will be closed on Monday for the Memorial Day Holiday, so with that said, I will signoff until we some more information to digest.
If you are interested in learning about Home Business Ideas and Opportunities, you can complete the form on my profile, or for more information visit:
http://jerseybenefits.com
http://johnkaighn.com
The S&P 500 still has not broken through the record we've talked about for two weeks now. It made it to within 2 points of 1,527.46 earlier this week, but closed out at 1,515.73 today. The Dow ended the week at 13,507.30 and the NASDAQ closed at 2557.20 ending a lackluser trading week. The markets will be closed on Monday for the Memorial Day Holiday, so with that said, I will signoff until we some more information to digest.
If you are interested in learning about Home Business Ideas and Opportunities, you can complete the form on my profile, or for more information visit:
http://jerseybenefits.com
http://johnkaighn.com
Tuesday, May 22, 2007
Amero Paranoia
I've recently read a few blogs that have discussed the creation of a "new currency" called the Amero, which supposedly is being clandestinely prepared to replace the currencies of Mexico, Canada and the United States. Once again the conspiracy theorists and pessimists, who believe America is in decline and the collapse of the dollar imminent, are seizing upon the news of a decline in the dollar as a reason for spreading their paranoia. They cite the rise of China as an economic power, and the trade imbalance we have with them as further evidence to support theories of the collapse of the dollar, even as China prepares to buy $3 billion of stock in Blackstone Group's IPO, in order to diversify their portfolio.
I did a search on the net to find more information about the Amero, and found ONE page of references to it. I've copied the best source I found, which has links to just about all the other articles you can find on the net, for those of you who might be interested in reading just about all there is on the subject. It is always important to find out all you can about a subject, before you report it as fact. My interpretation of the information about the Amero is that we are a long way from any serious discussion about such a currency, and even further away from relinquishing our sovereignity through the actual adoption of it.
The links didn't transfer over to this blog, but if you would like to see the same information with the links included, please go to my blog on myspace: http://blog.myspace.com/jerseybenefits
Here is the information I've researched:
"Sovereignty is not infinitely valuable"
Herb Grubel
These are the words of a Canadian advocate for the creation of a new currency for North American
countries. His theories seem to lead the pack of similar philosophers and economists.
In a foreword for Grubel's study on the prospect, Gordon Gibson characterizes the situation as such:
"Most fundamentally however, Mr. Grubel makes the sensible observation that "sovereignty is not
infinitely valuable." Every nation in the world, even the mighty United States, has traded off
elements of sovereignty to multi-national associations such as the WTO, NAFTA, and the United
Nations. Canada has been in the forefront of encouraging every such development--a natural policy
for a middle power."
For a "middle power" whose economy is weak and exchange rate declining steadily, such a maneuver
may be in the best interest. This is not the case when the strongest economy in the world, the United
States of America, considers diluting its monetary system with Mexico, a third world, "developing" nation
and Canada, a second socialist nation on our two land borders.
Further, U.S. sovereignty is, perhaps, our most precious facet, as defined in our Declaration of
Independence and Constitution. Our sovereignty is part of the formula that makes our Republic the most
unique political and cultural experiment in the history of civilization.
Rather than try to decode, re-describe and publish commentary on the prevailing philosophies and
arguments surrounding the need and advantages for a common hemispheric currency, this site provides
links to information from legitimate proponents and detractors.
Be advised that there is a lot of code and doublespeak in these articles. Few of the more elaborate
articles discuss the disadvantages to the U.S., but concentrate on the advantages to Canada and Mexico.
The most significant and timely aspect of the movement involves current U.S. participation in a
elaborate international program called the "Security and Prosperity Partnership Of North America, "
described elsewhere on this site.
The link-listing method on this site is in development. If you have particular comments or would like to
inform the host of this site as to a link to be reviewed for inclusion in this or any other section of this site,
please visit the "contact" page and inform us by email."
These links reach discussions of the "Amero, " "dollarization" and offer insight to the conditions of the
U.S. dollar, as well as Canadian and Mexican currencies.
The Case for the Amero: The Economics and Politics of a North American Monetary Union
Herbert G. Grubel--Herbert G. Grubel was David Somerville Chair in Taxation and Finance, The Fraser
Institute, and Professor of Economics (Emeritus), Simon Fraser University. He has a B.A. from
Rutgers University and a Ph.D. in economics from Yale University. He has taught full-time at Stanford
University, the University of Chicago, and the University of Pennsylvania; and has had temporary
appointments at universities in Berlin, Singapore, Cape Town, Nairobi, Oxford, and Canberra.
Herbert Grubel was the Reform Party Member of Parliament for Capliano-Howe Sound from 1993 to
1997, serving as the Finance Critic from 1995 to 1997. He has published 16 books and 180
professional articles in economics dealing with international trade and finance and a wide range of
economic policy issues.
The Plan to Replace the Dollar With the 'Amero'
Mr. Corsi is the author of several books, including "Unfit for Command: Swift Boat Veterans Speak
Out Against John Kerry" (along with John O'Neill), "Black Gold Stranglehold: The Myth of Scarcity
and the Politics of Oil" (along with Craig R. Smith), and "Atomic Iran: How the Terrorist Regime
Bought the Bomb and American Politicians." He is a frequent guest on the G. Gordon Liddy radio
show. He will soon co-author a new book with Jim Gilchrist on the Minuteman Project.
American University
The Threat of the Dollar: A case study
Wikipedia:
The online encyclopedia
Queens University, Canada
One of Canada's leading universities, with an international reputation for scholarship, research,
social purpose, spirit and diversity. Consistently ranked among the top universities in Canada,
Queen's is known for its high quality and incomparable 24-hour learning environment. The
University was established by Royal Charter of Queen Victoria in 1841 - twenty-six years before
Canadian confederation. Classes were first held in 1842. The earliest degree-granting institution in
the united Province of Canada, Queen's has reflected and helped shape Canadian values and
policies, educating many of the country's most notable political and cultural figures.
Help.com
Help.com is a network of people dedicated to helping you. Find answers to important questions.
Learn new skills. Achieve personal goals. Get inspired. Fix what’s broken. Build. Create. Solve
problems. Change things. Accomplish stuff that matters.
BankIntroductions.com
BankINTRODUCTIONS.com, is a private research group and banking introductions services
company based in Vancouver, British Columbia, Canada.
Fiscal and Generational Imbalances: An Update Adobe Reader required--get it here, free
A report to the Federal Reserve by Jagadeesh Gokhale and Kent Smetters, August 2005
I did a search on the net to find more information about the Amero, and found ONE page of references to it. I've copied the best source I found, which has links to just about all the other articles you can find on the net, for those of you who might be interested in reading just about all there is on the subject. It is always important to find out all you can about a subject, before you report it as fact. My interpretation of the information about the Amero is that we are a long way from any serious discussion about such a currency, and even further away from relinquishing our sovereignity through the actual adoption of it.
The links didn't transfer over to this blog, but if you would like to see the same information with the links included, please go to my blog on myspace: http://blog.myspace.com/jerseybenefits
Here is the information I've researched:
"Sovereignty is not infinitely valuable"
Herb Grubel
These are the words of a Canadian advocate for the creation of a new currency for North American
countries. His theories seem to lead the pack of similar philosophers and economists.
In a foreword for Grubel's study on the prospect, Gordon Gibson characterizes the situation as such:
"Most fundamentally however, Mr. Grubel makes the sensible observation that "sovereignty is not
infinitely valuable." Every nation in the world, even the mighty United States, has traded off
elements of sovereignty to multi-national associations such as the WTO, NAFTA, and the United
Nations. Canada has been in the forefront of encouraging every such development--a natural policy
for a middle power."
For a "middle power" whose economy is weak and exchange rate declining steadily, such a maneuver
may be in the best interest. This is not the case when the strongest economy in the world, the United
States of America, considers diluting its monetary system with Mexico, a third world, "developing" nation
and Canada, a second socialist nation on our two land borders.
Further, U.S. sovereignty is, perhaps, our most precious facet, as defined in our Declaration of
Independence and Constitution. Our sovereignty is part of the formula that makes our Republic the most
unique political and cultural experiment in the history of civilization.
Rather than try to decode, re-describe and publish commentary on the prevailing philosophies and
arguments surrounding the need and advantages for a common hemispheric currency, this site provides
links to information from legitimate proponents and detractors.
Be advised that there is a lot of code and doublespeak in these articles. Few of the more elaborate
articles discuss the disadvantages to the U.S., but concentrate on the advantages to Canada and Mexico.
The most significant and timely aspect of the movement involves current U.S. participation in a
elaborate international program called the "Security and Prosperity Partnership Of North America, "
described elsewhere on this site.
The link-listing method on this site is in development. If you have particular comments or would like to
inform the host of this site as to a link to be reviewed for inclusion in this or any other section of this site,
please visit the "contact" page and inform us by email."
These links reach discussions of the "Amero, " "dollarization" and offer insight to the conditions of the
U.S. dollar, as well as Canadian and Mexican currencies.
The Case for the Amero: The Economics and Politics of a North American Monetary Union
Herbert G. Grubel--Herbert G. Grubel was David Somerville Chair in Taxation and Finance, The Fraser
Institute, and Professor of Economics (Emeritus), Simon Fraser University. He has a B.A. from
Rutgers University and a Ph.D. in economics from Yale University. He has taught full-time at Stanford
University, the University of Chicago, and the University of Pennsylvania; and has had temporary
appointments at universities in Berlin, Singapore, Cape Town, Nairobi, Oxford, and Canberra.
Herbert Grubel was the Reform Party Member of Parliament for Capliano-Howe Sound from 1993 to
1997, serving as the Finance Critic from 1995 to 1997. He has published 16 books and 180
professional articles in economics dealing with international trade and finance and a wide range of
economic policy issues.
The Plan to Replace the Dollar With the 'Amero'
Mr. Corsi is the author of several books, including "Unfit for Command: Swift Boat Veterans Speak
Out Against John Kerry" (along with John O'Neill), "Black Gold Stranglehold: The Myth of Scarcity
and the Politics of Oil" (along with Craig R. Smith), and "Atomic Iran: How the Terrorist Regime
Bought the Bomb and American Politicians." He is a frequent guest on the G. Gordon Liddy radio
show. He will soon co-author a new book with Jim Gilchrist on the Minuteman Project.
American University
The Threat of the Dollar: A case study
Wikipedia:
The online encyclopedia
Queens University, Canada
One of Canada's leading universities, with an international reputation for scholarship, research,
social purpose, spirit and diversity. Consistently ranked among the top universities in Canada,
Queen's is known for its high quality and incomparable 24-hour learning environment. The
University was established by Royal Charter of Queen Victoria in 1841 - twenty-six years before
Canadian confederation. Classes were first held in 1842. The earliest degree-granting institution in
the united Province of Canada, Queen's has reflected and helped shape Canadian values and
policies, educating many of the country's most notable political and cultural figures.
Help.com
Help.com is a network of people dedicated to helping you. Find answers to important questions.
Learn new skills. Achieve personal goals. Get inspired. Fix what’s broken. Build. Create. Solve
problems. Change things. Accomplish stuff that matters.
BankIntroductions.com
BankINTRODUCTIONS.com, is a private research group and banking introductions services
company based in Vancouver, British Columbia, Canada.
Fiscal and Generational Imbalances: An Update Adobe Reader required--get it here, free
A report to the Federal Reserve by Jagadeesh Gokhale and Kent Smetters, August 2005
Sunday, May 20, 2007
Happy Memorial Day
The summer months, which usually are considered the doldrums by those in the investment community, could provide some interesting outcomes as we head into the Memorial Day weekend and what many see as the onset of the summer season. This is also the start of the summer driving season, and gasoline is already hovering around $3.00 a gallon. As hurricane season also begins to heat up, I hope there are no direct hits on the oil infrastructure, or the possiblity of $4.00 a gallon gasoline I've read about could become a reality. Meanwhile, the Dow Jones Industrial Average continues to set record after record, and now the S&P 500 is is less than 5 points away from its all time record of 1,527.46 set in 2000. If the Federal Reserve holds interest rates steady at the FOMC meeting in June, they will have held rates steady for a year, something the Fed does not do often. The Fed has held its target for short-term rates at 5.25% since June 2006, after raising it steadily for two years to tame inflation. Banks use the rate as a benchmark for pricing consumer and business loans. These issues could be setting the stage for a very interesting second half of 2007.
For well over a year now, I've been writing about the dual concerns of a slowing economy and inflation. Fed policy has been concerned with remaining hawkish on inflation, while some economists, investors and journalists expected rate cuts as early as September 2006. The midcycle slowdown economists predicted seems to be exactly what has happened, with the bottom being symbolized by April's paltry retail sales figures. While many thought the housing slump would drag the economy into a recession, it seems the builders and subprime borrowers are the ones bearing the brunt of the pain. Most homeowners remain solvent and able to meet mortgage expenses. As long as the employment numbers continue to hold steady, consumers should be able to continue to meet obligations and make discretionary purchases.
Where the economy goes from here no one can predict with certainty, but there are reasonable hypotheses one can make based on the data. This economic cycle is in the mature phase of the current expansion and the mid cycle slowdown was like a breather, before growth picks up again. Expansions don't last forever, so at some point in the future we will have a recession again. With that said, it looks as if the second half of 2007 will be a time when growth reignites and inflation will continue to be the number one concern of the Fed. With the productivity of workers declining, and the pool of skilled workers drained, labor will begin to demand higher wages. Usually, when the economy slows down unemployment ticks upward, but that hasn't happened during the first two quarters this year. Some economists think this is because the slowdown in housing hasn't worked its way down to the employment figures. Others think there is a possibility the economy is actually growing faster than the GDP numbers indicate. As we head into the Memorial Day weekend, one thing is certain, gas is going to cost you about $3.00 a gallon. As far as interest rates are concerned, the jury is still out. Will the Fed raise, cut or hold? Will the S&P 500 EVER break 1,527.46? Time will tell. Enjoy the holiday!
For more information visit:
http://jerseybenefits.com
http://johnkaighn.com
For well over a year now, I've been writing about the dual concerns of a slowing economy and inflation. Fed policy has been concerned with remaining hawkish on inflation, while some economists, investors and journalists expected rate cuts as early as September 2006. The midcycle slowdown economists predicted seems to be exactly what has happened, with the bottom being symbolized by April's paltry retail sales figures. While many thought the housing slump would drag the economy into a recession, it seems the builders and subprime borrowers are the ones bearing the brunt of the pain. Most homeowners remain solvent and able to meet mortgage expenses. As long as the employment numbers continue to hold steady, consumers should be able to continue to meet obligations and make discretionary purchases.
Where the economy goes from here no one can predict with certainty, but there are reasonable hypotheses one can make based on the data. This economic cycle is in the mature phase of the current expansion and the mid cycle slowdown was like a breather, before growth picks up again. Expansions don't last forever, so at some point in the future we will have a recession again. With that said, it looks as if the second half of 2007 will be a time when growth reignites and inflation will continue to be the number one concern of the Fed. With the productivity of workers declining, and the pool of skilled workers drained, labor will begin to demand higher wages. Usually, when the economy slows down unemployment ticks upward, but that hasn't happened during the first two quarters this year. Some economists think this is because the slowdown in housing hasn't worked its way down to the employment figures. Others think there is a possibility the economy is actually growing faster than the GDP numbers indicate. As we head into the Memorial Day weekend, one thing is certain, gas is going to cost you about $3.00 a gallon. As far as interest rates are concerned, the jury is still out. Will the Fed raise, cut or hold? Will the S&P 500 EVER break 1,527.46? Time will tell. Enjoy the holiday!
For more information visit:
http://jerseybenefits.com
http://johnkaighn.com
Sunday, May 13, 2007
Utilizing Affiliate Programs
If you own your own website or blog, affiliate marketing programs can greatly improve your income and enhance your credibility among your customers. When signing up for affiliate programs, it should involve consideration as to the types of information that you already have on your website or blog. For example, you are more likely to have increased sales if you own a website about cats and place affiliate links on your website related to pet care. The affiliate products that you promote should always be related to the primary website or else you run the risk of confusing potential customers. Confused customers may not provide the business you are hoping for.
There are many affiliate marketing programs to choose from, so selecting an appropriate one for your website should not be too difficult. Before you join, you want to be fully aware of the pay structure and any changes that could be made to the pay structure. Be sure to thoroughly review the affiliate program and make sure you understand it completely before you associate your name with it. Credibility is very important if you want to build a loyal group of customers. If you mislead them, they will not be back.
If you are an affiliate, many times you will need to do more than simply place their link on your webpage. Although, some affiliates are simply link based, others may provide you with an entire internet based operation, or what is sometimes called a turnkey solution. Be sure to keep the links on your site updated. Some companies may be promoting seasonal items and you will appear more credible if your links reflect the seasonality of your affiliates. If a customer visits your site in December and notices that you are still promoting summer items, they are more likely to leave your site without considering the other information or products that you offer.
Sometimes a company goes out of business and their links can be replaced by an adult site or one that is unrelated to your content. If you do not keep on top of updating your links, you could be promoting an offensive or unrelated site. You should constantly review the various links you've placed on your site and eliminate dysfunctional links, because customers can get very frustrated if a link doesn't do what it is supposed to do. If your website is professional, visitors are more likely to spend time on your site, come back for subsequent visits and eventually convert to being paying customers.
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 http://www.johnkaighn.com and http://www.jerseybenefits.com
There are many affiliate marketing programs to choose from, so selecting an appropriate one for your website should not be too difficult. Before you join, you want to be fully aware of the pay structure and any changes that could be made to the pay structure. Be sure to thoroughly review the affiliate program and make sure you understand it completely before you associate your name with it. Credibility is very important if you want to build a loyal group of customers. If you mislead them, they will not be back.
If you are an affiliate, many times you will need to do more than simply place their link on your webpage. Although, some affiliates are simply link based, others may provide you with an entire internet based operation, or what is sometimes called a turnkey solution. Be sure to keep the links on your site updated. Some companies may be promoting seasonal items and you will appear more credible if your links reflect the seasonality of your affiliates. If a customer visits your site in December and notices that you are still promoting summer items, they are more likely to leave your site without considering the other information or products that you offer.
Sometimes a company goes out of business and their links can be replaced by an adult site or one that is unrelated to your content. If you do not keep on top of updating your links, you could be promoting an offensive or unrelated site. You should constantly review the various links you've placed on your site and eliminate dysfunctional links, because customers can get very frustrated if a link doesn't do what it is supposed to do. If your website is professional, visitors are more likely to spend time on your site, come back for subsequent visits and eventually convert to being paying customers.
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 http://www.johnkaighn.com and http://www.jerseybenefits.com
Wednesday, May 9, 2007
Fed Still On Hold
The Federal Reserve left interest rates on hold at the current level of 5.25% during the Federal Open Market Committee meeting today. The central bank noted the economy has been slowing, but is still expected to grow between 2.5% and 3% this year. As a result, they felt inflation is too high for their comfort level and still the number one threat to the economy.
The Dow Jones Industrial Average sprinted to another record close finishing at 13,369.29 for the session. The Standard and Poor's 500 added 4.86 points to close at 1,512.58, which is getting closer and closer to the record set in 2000, when the index reached 1,527.46. The Nasdaq composite index rose 4.59, or 0.18 percent, to 2,576.34. Of course, it is still far from the record set in 2000. Maybe someday, it too will surpass the old record, but I am not holding my breath for it to happen before the end of the decade.
The Dow Jones Industrial Average sprinted to another record close finishing at 13,369.29 for the session. The Standard and Poor's 500 added 4.86 points to close at 1,512.58, which is getting closer and closer to the record set in 2000, when the index reached 1,527.46. The Nasdaq composite index rose 4.59, or 0.18 percent, to 2,576.34. Of course, it is still far from the record set in 2000. Maybe someday, it too will surpass the old record, but I am not holding my breath for it to happen before the end of the decade.
Sunday, May 6, 2007
Markets, Limbo, News and Opinions
As we have been witnessing for the last seven months, the Dow Jones Industrial Average continues to set new records, since surpassing the old record attained back in 2000 at the height of the Tech Craze. Once again, the DJIA closed Friday at 13,264.32, another record high. Since the Dow surpassed the old high back in October of 2006, I have been concerned that the broader market, represented by the S&P 500 index, hasn't beaten its old mark, which was also set back in 2000. However, the S&P 500 has stealthily been adding points and is now within 21.84 points of surpassing its previous record of 1,527.46. The broader market setting a new record and adding to it would be a very positive sign for the continued advance of the current bull market. This past Friday's weak employment numbers indicate a further slowing of the economy. This should give the Fed the ability hold interest rates at the current level during the FOMC meeting on Wednesday. The Treasury Department releases the Producer Price Index on Friday, which will give a further indication of the direction of wholesale price inflation.
While I expect the S&P 500 to beat the old mark this upcoming week, I don't think the advance of this bull market will, by any stretch of the imagination, be easy or rapid going forward. One of the things I expect is that shortly after the S&P 500 sets a new mark, we could see a bit of a sell off and profit taking, which is a good thing. It is interesting to note this current rally is being led by mostly professional investors, while the retail investor is not really participating. My thoughts on that one are that the "cocktail party conversation" investors are still occupied by real estate and trying to flip houses. By the time these trend setting, band wagon jumpers climb aboard the stock market train again, the bull market will be nearing its peak. Let's hope we have some time before this happens. I'm hoping another year or so, because it may take some of them that long to sell their speculative houses!
This morning I also read an article in my local paper about Limbo, and the fact that Catholics, and any other religion that espoused the concept before, don't have to believe in it anymore, if they choose not too. For those of you who don't know the meaning of Limbo, it is the place an unbaptized baby goes if it dies. I just wonder if that means the word will disappear too, because then we wouldn't have a way to describe where our county is right now. Limbo, you see, seems to be as good a word as any to describe the standoff between Congress and the President on the funding of the Iraq War. The Democrats are showing exactly why they are so out of touch with the huge group of Americans who are neither right wing conservatives nor tree hugging liberals. Instead of coming up with a plan to have meaningful debate about the Iraq War, the Democrats have acted like they won a sweeping majority in both Houses of Congress, rather than their rather narrow majority. Immediately, out came the white flag and the pessimistic, defeatist attitude. Of course, the President hasn't been much better at listening to anyone.
So, here we sit in LIMBO, waiting for someone who "gets it" and stops catering to and polarizing the right and the left in this country. While the 2008 campaign is already in full swing, I am really somewhat disturbed by the lack of qualified leaders who might actually be able to unite this country. It must be done in the middle. We have to stop fighting the old battles between the right and left, and realize there is a real enemy out there that wants to destroy everything America stands for, and he isn't going away! I think it is safe to say most Americans are somewhere in the middle politically. Many moderates believe it is a woman's right to decide the fate of her unborn child within limits, don't have a problem with civil unions and what people do in their bedrooms, would like to keep taxes low, realize the government wastes tons of money and would like to see it be more frugal, hate the fact we are having soldiers killed in Iraq, but realize we CAN'T CUT AND RUN, understand we can't close our borders and isolate ourselves from the rest of the world, understand the threat posed by islamic terrorists, probably inhaled, and want to see policies that bring the most jobs and wealth to the largest majority of people in our country. What is your feeling on some of these issues?
John Kaighn
http://jerseybenefits.com
http://johnkaighn.com
While I expect the S&P 500 to beat the old mark this upcoming week, I don't think the advance of this bull market will, by any stretch of the imagination, be easy or rapid going forward. One of the things I expect is that shortly after the S&P 500 sets a new mark, we could see a bit of a sell off and profit taking, which is a good thing. It is interesting to note this current rally is being led by mostly professional investors, while the retail investor is not really participating. My thoughts on that one are that the "cocktail party conversation" investors are still occupied by real estate and trying to flip houses. By the time these trend setting, band wagon jumpers climb aboard the stock market train again, the bull market will be nearing its peak. Let's hope we have some time before this happens. I'm hoping another year or so, because it may take some of them that long to sell their speculative houses!
This morning I also read an article in my local paper about Limbo, and the fact that Catholics, and any other religion that espoused the concept before, don't have to believe in it anymore, if they choose not too. For those of you who don't know the meaning of Limbo, it is the place an unbaptized baby goes if it dies. I just wonder if that means the word will disappear too, because then we wouldn't have a way to describe where our county is right now. Limbo, you see, seems to be as good a word as any to describe the standoff between Congress and the President on the funding of the Iraq War. The Democrats are showing exactly why they are so out of touch with the huge group of Americans who are neither right wing conservatives nor tree hugging liberals. Instead of coming up with a plan to have meaningful debate about the Iraq War, the Democrats have acted like they won a sweeping majority in both Houses of Congress, rather than their rather narrow majority. Immediately, out came the white flag and the pessimistic, defeatist attitude. Of course, the President hasn't been much better at listening to anyone.
So, here we sit in LIMBO, waiting for someone who "gets it" and stops catering to and polarizing the right and the left in this country. While the 2008 campaign is already in full swing, I am really somewhat disturbed by the lack of qualified leaders who might actually be able to unite this country. It must be done in the middle. We have to stop fighting the old battles between the right and left, and realize there is a real enemy out there that wants to destroy everything America stands for, and he isn't going away! I think it is safe to say most Americans are somewhere in the middle politically. Many moderates believe it is a woman's right to decide the fate of her unborn child within limits, don't have a problem with civil unions and what people do in their bedrooms, would like to keep taxes low, realize the government wastes tons of money and would like to see it be more frugal, hate the fact we are having soldiers killed in Iraq, but realize we CAN'T CUT AND RUN, understand we can't close our borders and isolate ourselves from the rest of the world, understand the threat posed by islamic terrorists, probably inhaled, and want to see policies that bring the most jobs and wealth to the largest majority of people in our country. What is your feeling on some of these issues?
John Kaighn
http://jerseybenefits.com
http://johnkaighn.com
Wednesday, May 2, 2007
Midweek Economic Report
The Dow Jones Industrial Average surpassed 13,200 for the first time today, after a report on U.S. factory orders generated strong investor enthusiasm and optimism about the economy. The Dow gained more than 75 points and reached its second straight record close. The Commerce Department reported orders to U.S. factories rose 3.1 percent in March. This was the most robust in a year, led by strong demand for commercial aircraft. This increase was much higher than the 2 percent rise many analysts had been anticipating. The report was accompanied by a sharp increase in the level of business investment. The Labor Department will be reporting on March job creation and unemployment on Friday, and investors will be eyeing this report, as well corporate profits. All of this information will be dissected in an effort to ascertain how rapidly the economy might be slowing and whether earnings reports, which for the most part have beaten expectations, might continue to give stocks a lift. With the direction of the economy by no means certain, the competing scenarios of inflation or economic slowdown, which we've discussed since last year, still ring true today.
The term used by economists to describe what seems to have happened at this juncture is a mid cycle slowdown. With the initial first quarter GDP growth reported on Friday at an anemic 1.3%, and with the reports concerning factory orders and business investment reported today, the conclusion one could draw is the economy bottomed in the first quarter. If this is the case, it implies there may be quite a bit more life in the current expansion. The stock market, which is a leading indicator, seems to be signalling higher highs are in the future. If this is a true mid cycle slowdown, it would be very positive because it helps to ease concerns about inflation, which in turn could mean the Fed will continue to hold interest rates steady.
In all fairness, it is important to point out this bullish outlook is not shared by everyone. While some of the statistics can give one a true dose of optimism, there are those who look at the weaker dollar, the housing slowdown and the endless use of leverage in the financial system as a harbinger of bad times to come. Those in the bear camp tend to feel the stock market is overly optimistic about an economy that has slowed substantially and will continue to do so in the face of ever mounting pressure on consumers, due to decreasing home values and the inability to refinance mortgages with ever increasing monthly payments. According to Alan Abelson, the fabled writer for Barrons and the quintessential bear, "We think the economy will slide into recession, as the drag from housing and unprecedented consumer debt make themselves increasingly felt. We think the dollar will continue down the slippery slope, complicating Mr. Bernanke's life and inducing slumpflation. We think this overleveraged, overheated, overhyped market will blow itself out and touch off a chain reaction that'll rock global bourses. And all this will happen, if not tomorrow, then soon enough, we're afraid." These are some very sobering thoughts to ponder as we march toward Dow 14,000. I am relatively sure that number will not reached in the scant six months it took to go from 12,000 to 13,000. But then again, you just never know!
So how does one deal with the starkly different opinions about the direction of the economy and the markets? Well, you could sit on the sidelines in cash. The problem with that is, you just never know when it is safe to jump back into the market. I think it is better to have a disciplined, diversified, long term approach to investing. You should use a mix of cash, stocks, bonds, mutual funds or ETF's, commodities and real estate at a comfortable level of risk for YOU. This diversification can help protect you from the gyrations of one or more asset classes, when they fall out of favor. There are many risks lurking out there in the world to upset your apple cart. While you can't protect yourself from every risk to your portfolio, the more diversified your assets, the better chance you have of riding out the financial storms you'll encounter.
John Kaighn
http://jerseybenefits.com
http://johnkaighn.com
The term used by economists to describe what seems to have happened at this juncture is a mid cycle slowdown. With the initial first quarter GDP growth reported on Friday at an anemic 1.3%, and with the reports concerning factory orders and business investment reported today, the conclusion one could draw is the economy bottomed in the first quarter. If this is the case, it implies there may be quite a bit more life in the current expansion. The stock market, which is a leading indicator, seems to be signalling higher highs are in the future. If this is a true mid cycle slowdown, it would be very positive because it helps to ease concerns about inflation, which in turn could mean the Fed will continue to hold interest rates steady.
In all fairness, it is important to point out this bullish outlook is not shared by everyone. While some of the statistics can give one a true dose of optimism, there are those who look at the weaker dollar, the housing slowdown and the endless use of leverage in the financial system as a harbinger of bad times to come. Those in the bear camp tend to feel the stock market is overly optimistic about an economy that has slowed substantially and will continue to do so in the face of ever mounting pressure on consumers, due to decreasing home values and the inability to refinance mortgages with ever increasing monthly payments. According to Alan Abelson, the fabled writer for Barrons and the quintessential bear, "We think the economy will slide into recession, as the drag from housing and unprecedented consumer debt make themselves increasingly felt. We think the dollar will continue down the slippery slope, complicating Mr. Bernanke's life and inducing slumpflation. We think this overleveraged, overheated, overhyped market will blow itself out and touch off a chain reaction that'll rock global bourses. And all this will happen, if not tomorrow, then soon enough, we're afraid." These are some very sobering thoughts to ponder as we march toward Dow 14,000. I am relatively sure that number will not reached in the scant six months it took to go from 12,000 to 13,000. But then again, you just never know!
So how does one deal with the starkly different opinions about the direction of the economy and the markets? Well, you could sit on the sidelines in cash. The problem with that is, you just never know when it is safe to jump back into the market. I think it is better to have a disciplined, diversified, long term approach to investing. You should use a mix of cash, stocks, bonds, mutual funds or ETF's, commodities and real estate at a comfortable level of risk for YOU. This diversification can help protect you from the gyrations of one or more asset classes, when they fall out of favor. There are many risks lurking out there in the world to upset your apple cart. While you can't protect yourself from every risk to your portfolio, the more diversified your assets, the better chance you have of riding out the financial storms you'll encounter.
John Kaighn
http://jerseybenefits.com
http://johnkaighn.com
Tuesday, April 24, 2007
Diversification Among Asset Classes
There has been a great deal of press in recent years given to portfolio diversification, in particular to the use of hedge funds as a means of alternative investment strategy. Many times these funds are referred to as vehicles to use for diversification, because they are not linked to traditional investments, such as stocks and bonds. However, on a closer inspection, it becomes evident hedge funds, while using 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, these 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. Some fee-based Financial Advisors have been recommending them, to increase returns in portfolios, where the advisory fee is deducted from quarterly returns, and paid directly by the client. 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 10 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.
After the technology bubble burst in 2000, there was a rotation out of tech into real estate, energy, natural resources, bonds and emerging markets. Long term holders of real estate and these other asset classes saw huge gains, and mutual funds in these asset classes were the market leaders since the tech bust. Last year, investors began to move money out of real estate as the sector cooled rapidly. In my opinion, the idea is not to switch asset classes and try to time these these rotations, but rather to attempt to build a portfolio, which holds positions in all of these asset classes. 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. When you look at your statement, check a newspaper, or review performance on the web, you get a snapshot of performance on that date. You will get the year to date return, which is valuable, but the 3 and 5 year returns are as of the date you are looking. While this information is definitely useful, be sure to check your year end data to analyze your annual performance. This should keep you from making knee jerk decisions based on short term news events.
John Kaighn
Jersey Benefits Advisors
http://Jerseybenefits.com
http://JohnKaighn.com
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, these 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. Some fee-based Financial Advisors have been recommending them, to increase returns in portfolios, where the advisory fee is deducted from quarterly returns, and paid directly by the client. 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 10 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.
After the technology bubble burst in 2000, there was a rotation out of tech into real estate, energy, natural resources, bonds and emerging markets. Long term holders of real estate and these other asset classes saw huge gains, and mutual funds in these asset classes were the market leaders since the tech bust. Last year, investors began to move money out of real estate as the sector cooled rapidly. In my opinion, the idea is not to switch asset classes and try to time these these rotations, but rather to attempt to build a portfolio, which holds positions in all of these asset classes. 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. When you look at your statement, check a newspaper, or review performance on the web, you get a snapshot of performance on that date. You will get the year to date return, which is valuable, but the 3 and 5 year returns are as of the date you are looking. While this information is definitely useful, be sure to check your year end data to analyze your annual performance. This should keep you from making knee jerk decisions based on short term news events.
John Kaighn
Jersey Benefits Advisors
http://Jerseybenefits.com
http://JohnKaighn.com
Saturday, April 21, 2007
Market & Economic News Update
The flurry of positive earnings reports and somewhat benign inflation news has given the Dow Jones Industrial Average enough legs to be within 39 points of the 13,000 mark, as the markets take a breather this weekend. Even with a 4.5% drop in Shanghai, the US markets barely blinked, before resuming their upward surge. Given all of the negatives lurking out there, such as the housing slowdown, the trade imbalance, the declining dollar and rising oil prices, the market has exhibited some remarkable strength. This is because the strong earnings demonstrate the economy may not have slowed as much as previously thought during the first quarter. If this strong economic performance continues during the second quarter, further gains in the averages should continue.
While the 13,000 mark is really of no consequence, other than a number attained, every time the average breaks a 1,000 point increment, it does give one the opportunity to pause and reflect about it being a milestone of sorts. Of course with the declining dollar, it is a good thing we are not evaluating our portfolios in Euros, because if that were the case, we might not be quite as ecstatic. While the decline in the dollar gives the indices a lift which boosts portfolio values and also improves the trade balance, too steep a decline can also be a trigger for inflation. What this means is the Federal Reserve will have to continue their balancing act between controlling inflation and moderating growth for the forseeable future. My guess is we could see interest rates remain in a holding pattern, unless economic growth picks up further in the second quarter.
The growth in Gross Domestic Product will be reported on Friday and Lehman Brothers is anticipating 1.8%, while the consensus is somewhere around 2.1%, less than the 2.5% growth in the fourth quarter of 2006. Anything below the 2% level will have investors clamoring for a rate cut, but I really don't think the Fed will comply. It is still a wait and see situation, which is a very familiar scenario at this juncture. Stay tuned for further updates.
While the 13,000 mark is really of no consequence, other than a number attained, every time the average breaks a 1,000 point increment, it does give one the opportunity to pause and reflect about it being a milestone of sorts. Of course with the declining dollar, it is a good thing we are not evaluating our portfolios in Euros, because if that were the case, we might not be quite as ecstatic. While the decline in the dollar gives the indices a lift which boosts portfolio values and also improves the trade balance, too steep a decline can also be a trigger for inflation. What this means is the Federal Reserve will have to continue their balancing act between controlling inflation and moderating growth for the forseeable future. My guess is we could see interest rates remain in a holding pattern, unless economic growth picks up further in the second quarter.
The growth in Gross Domestic Product will be reported on Friday and Lehman Brothers is anticipating 1.8%, while the consensus is somewhere around 2.1%, less than the 2.5% growth in the fourth quarter of 2006. Anything below the 2% level will have investors clamoring for a rate cut, but I really don't think the Fed will comply. It is still a wait and see situation, which is a very familiar scenario at this juncture. Stay tuned for further updates.
Thursday, April 19, 2007
Reflecting on the Virginia Tech Tragedy
As a counselor and parent of a college graduate and college student I need to offer my most sincere condolences to the parents, students and staff members of Virginia Tech, who were so horrendously affected by the tragedy on your campus. There are really no words that can convey to you the extreme sadness that I feel, and I know the feelings you are experiencing, especially those who lost loved ones, can't even begin to be understood by most of us. The outpouring of grief by so many people who don't even know you must help somewhat, but in the end, the utter senselessness of this entire experience must be completely overwhelming. I only hope you can find some hope and healing in the days to come.
As the media continues to churn out multiple stories about this horrific event, one of the themes that constantly emerges is why wasn't more done to stop this from happening. This is the one thing you can always count on from the pundits in our media establishment. It seems they always want to find closure by placing the blame on one or more of the institutions involved in the tragedy. Unfortunately, our medical, psychiatric, education and law enforcement communities are ill equipped to determine in advance whether an individual has the capacity for this level of violence. Since many politicians and corporate CEO's exhibit some of the personality traits of psychopaths, and there is truly a fine line between genius and insanity, as evidenced by the endless parade of celebrities involved with self destructive behaviors, the impulse to say this young man should have been stopped long ago, due to the "signs he exhibited" is foolhearty. Most psychopaths are very intelligent and adept at acertaining the intent of psychological tests, and if we tried to isolate people from society, due to "signs they exhibited", it would probably be the least sophisticated and least violent of our psychiatric population, not the cold hearted killers. It usually takes a triggering event to cause a psychopathic personality to resort to violence of this scale, and this triggering event may be something that is eventually uncovered.
So, as you watch the various specials on television and read the multitude of solutions offered by journalists, try to remember the innocent victims of this tragedy and feelings of their families, who are suffering beyond belief. Don't be quick to rush to conclusions about who failed to do what in the heat of the moment, because it is easy to do that in hindsight. There is just one person to blame for this terrible act, and that is Cho Seung-Hui. We are all ultimately accountable for our actions, and while it is truly unsettling to attempt to understand why such a random, violent act occurs, the perpetrator of this massacre has met his fate and will surely face a wrath worse than any we could devise in this world.
John Kaighn is a Registered Investment Advisor with Jersey Benefits Advisors, a counselor in the Middle Twp. School District and writes articles on various business and investment information, ideas and opportunities. For more information about this and other topics you can visit http://www.johnkaighn.com and http://www.jerseybenefits.com
As the media continues to churn out multiple stories about this horrific event, one of the themes that constantly emerges is why wasn't more done to stop this from happening. This is the one thing you can always count on from the pundits in our media establishment. It seems they always want to find closure by placing the blame on one or more of the institutions involved in the tragedy. Unfortunately, our medical, psychiatric, education and law enforcement communities are ill equipped to determine in advance whether an individual has the capacity for this level of violence. Since many politicians and corporate CEO's exhibit some of the personality traits of psychopaths, and there is truly a fine line between genius and insanity, as evidenced by the endless parade of celebrities involved with self destructive behaviors, the impulse to say this young man should have been stopped long ago, due to the "signs he exhibited" is foolhearty. Most psychopaths are very intelligent and adept at acertaining the intent of psychological tests, and if we tried to isolate people from society, due to "signs they exhibited", it would probably be the least sophisticated and least violent of our psychiatric population, not the cold hearted killers. It usually takes a triggering event to cause a psychopathic personality to resort to violence of this scale, and this triggering event may be something that is eventually uncovered.
So, as you watch the various specials on television and read the multitude of solutions offered by journalists, try to remember the innocent victims of this tragedy and feelings of their families, who are suffering beyond belief. Don't be quick to rush to conclusions about who failed to do what in the heat of the moment, because it is easy to do that in hindsight. There is just one person to blame for this terrible act, and that is Cho Seung-Hui. We are all ultimately accountable for our actions, and while it is truly unsettling to attempt to understand why such a random, violent act occurs, the perpetrator of this massacre has met his fate and will surely face a wrath worse than any we could devise in this world.
John Kaighn is a Registered Investment Advisor with Jersey Benefits Advisors, a counselor in the Middle Twp. School District and writes articles on various business and investment information, ideas and opportunities. For more information about this and other topics you can visit http://www.johnkaighn.com and http://www.jerseybenefits.com
Friday, April 13, 2007
Wondering Why You Are Not Getting Rich Quickly?
The one thing I have learned, when it comes to building wealth, is the fact that there are no short cuts to instant riches. While there have been a few high profile incidents of extreme wealth being created almost overnight, as in the case of Google and a few other "instant" successes, even in these cases there has been huge risk and extensive capital expended in order to create the wealth. In fact the most important factors which lead to success in business are the willingness to assume risk, willingness to expend capital, the ability to focus on an idea and bring it to fruition and some good old fashioned luck.
While I'll be the first to recognize there are some people who just seem to stumble into a situation and are in the right place at the right time, or that some folks will win the lottery, sell a stock at just the right time, or buy and sell real estate for a quick profit, most people who have built wealth have done so over time. Furthermore, they approach investing with a disciplined plan and the relentless pursuit of their dream. I will focus the rest of this article on the people who build wealth through a disciplined approach. Following this model is more likely to lead to the desired goal of financial security.
Many people wish to own their own business and be an entrepreneur, but many of us don't have the "brainstorm idea" which leads to a blockbuster business, or one that totally changes the dynamics of a business model. Luckily, this is not necessary in order to succeed as an entrepreneur. While it would be nice to come up with one of these blockbuster ideas, there are plenty of other ways to become the owner of your own business. Purchasing an existing business is one such way to join the ranks of the business world. There are individual businesses and franchises which can be purchased outright, or financed by various means. This is usually an expensive endeavor, and usually requires leaving your full time job in order to manage the business. This also involves a degree of risk, but if you do your homework, and devote the time it takes to manage the leverage of the purchase price, plus the day to day operations, it can be an excellent way to build long term wealth.
If the idea of owning a business while maintaining a full time job is more your cup of tea, there are many business models which can facilitate this. Again, there is no free ride, because nobody is going to provide you with all of the tools to run a profitable business, without some cost. Unless you are strictly interested in doing a specific task at home for a fee, most of the business models I've reviewed for an at home or online business require money to be spent for hosting a site, joining affiliates and marketing. These are reasonable expectations when you utilize an existing franchise, or affiliate program. Developing multiple streams of income is very desireable and can be achieved by developing a home business along with your full time job. While your goal may be to eventually quit your full time employement, or augment retirement, developing an online or home business can be a rewarding way to be an entrepreneur.
So, if getting rich quickly is your main goal, then there is a good possibility you will continue to go from one "cocktail party conversation" trend to another, such as day trading or real estate flipping. We all know where those bubbles have led. This is the equivalent of gambling, and while I know full well sometimes people do quite well gambling, I don't recommend it as an investment technique. If building real wealth is your goal, then developing streams of income and systematically investing in diversified assets will lead to ever increasing equity and financial security. One day you'll look at your portfolio of investments and realize you've built wealth faster than you thought you would.
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 http://www.johnkaighn.com and http://www.jerseybenefits.com
While I'll be the first to recognize there are some people who just seem to stumble into a situation and are in the right place at the right time, or that some folks will win the lottery, sell a stock at just the right time, or buy and sell real estate for a quick profit, most people who have built wealth have done so over time. Furthermore, they approach investing with a disciplined plan and the relentless pursuit of their dream. I will focus the rest of this article on the people who build wealth through a disciplined approach. Following this model is more likely to lead to the desired goal of financial security.
Many people wish to own their own business and be an entrepreneur, but many of us don't have the "brainstorm idea" which leads to a blockbuster business, or one that totally changes the dynamics of a business model. Luckily, this is not necessary in order to succeed as an entrepreneur. While it would be nice to come up with one of these blockbuster ideas, there are plenty of other ways to become the owner of your own business. Purchasing an existing business is one such way to join the ranks of the business world. There are individual businesses and franchises which can be purchased outright, or financed by various means. This is usually an expensive endeavor, and usually requires leaving your full time job in order to manage the business. This also involves a degree of risk, but if you do your homework, and devote the time it takes to manage the leverage of the purchase price, plus the day to day operations, it can be an excellent way to build long term wealth.
If the idea of owning a business while maintaining a full time job is more your cup of tea, there are many business models which can facilitate this. Again, there is no free ride, because nobody is going to provide you with all of the tools to run a profitable business, without some cost. Unless you are strictly interested in doing a specific task at home for a fee, most of the business models I've reviewed for an at home or online business require money to be spent for hosting a site, joining affiliates and marketing. These are reasonable expectations when you utilize an existing franchise, or affiliate program. Developing multiple streams of income is very desireable and can be achieved by developing a home business along with your full time job. While your goal may be to eventually quit your full time employement, or augment retirement, developing an online or home business can be a rewarding way to be an entrepreneur.
So, if getting rich quickly is your main goal, then there is a good possibility you will continue to go from one "cocktail party conversation" trend to another, such as day trading or real estate flipping. We all know where those bubbles have led. This is the equivalent of gambling, and while I know full well sometimes people do quite well gambling, I don't recommend it as an investment technique. If building real wealth is your goal, then developing streams of income and systematically investing in diversified assets will lead to ever increasing equity and financial security. One day you'll look at your portfolio of investments and realize you've built wealth faster than you thought you would.
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 http://www.johnkaighn.com and http://www.jerseybenefits.com
Tuesday, April 10, 2007
First Quarter Update
Market Watch
The markets began the new year adding to the gains of 2006 with the DJIA racing to a high of 12,786.64, the S&P 500 increasing to 1,459.68 and the NASDAQ reaching 2,524.94 before hitting some headwinds in February. At the close of the first quarter, the DJIA was down 0.9% for the year closing at 12,354.35, while the S&P 500 closed the quarter up 0.2% at 1,420.86 and the NASDAQ finished at 2,421.64 up 0.3% for 2007. While the Dow is still above its high set during the Tech Wreck of 2000, the S&P 500 still has not reached it previous high of 1,527.46, which is a technical feat I feel needs to happen for this bull market to continue. Since the S&P 500 is an index that tracks a broad range of large companies, its march toward the all time record is an indicator of the overall health of the market and the economy.
The headwinds I spoke of earlier came in the form of higher oil prices, Greenspan's recession remarks and the slumping housing market. Oil prices have been bouncing around between $60 and $67 a barrel, rebounding from just under $60 a barrel in January. The tensions in the Persian Gulf over British sailors being taken hostage by the Iranian Navy (shades of 1979) has been the latest culprit fueling the rise in the price of oil.
Greenspan's speech placing the odds of recession in 2007 at 25% stopped the market's advance in its tracks in February. It should really come as no surprise that the possibility of a recession exists, especially since we are in the mature phase of the current expansion, know as prosperity. There are many factors which could tip the economy into negative growth and end this current expansion, but that is just the nature of the economic cycle. For the foreseeable future, it looks as if interest rates will remain on hold and growth will continue to ease from the pace of 2006.
One of the biggest drags on the economy of late is the continued slump in the housing market exacerbated by the concern that the meltdown in the sub prime mortgage market will spill over into the prime market. While defaults by borrowers are increasing, which in turn has caused bankruptcies by lenders, the real concern is how the sub prime debacle will effect the many derivative investments which have been securitized from these sub prime loans. Mortgages in many cases are not held by the companies that write them, but are bundled into securities and sold to investors to spread the risk. As the value of these assets declines, banks, hedge funds and private equity firms head for the exits. This unwinding of positions always leaves someone "holding the bag". I hope the risk management tools used in the collateralized mortgage obligation market are better than the risk management tools used by Amaranth Advisors in assessing the risk of the natural gas markets in September 2006!
Just to add a touch of irony to the current rage of private equity ventures taking public companies private, the granddaddy of private equity firms, Blackstone Group, has filed its plans to go public. Blackstone has been highly successful and according to Mike Santoli of Barrons, " Blackstone will have little problem achieving a $40 billion market cap", and no doubt, "it will become a core holding in an alternate asset management sector." The stock will "open with a big pop-which means it immediately will be unattractively valued. The idea of having access to permanent capital rather than dialing up pension funds for every cent Blackstone invests makes some sense. In other words, you can respect the logic of the deal without buying the stock."
Have You Reviewed Your Life Insurance Lately?
When was the last time you took a serious look at your life insurance coverage. Life insurance was created to provide cash for your family in the event of your death. The goal being to provide your beneficiaries a means to ease the financial burden that results from the death of a parent or spouse. The beneficiaries may choose to use the benefits of a life insurance policy in any way they choose, such as paying for funeral expenses, covering mortgage payments or investing the proceeds and taking systematic payments to augment income. Generally, the death benefit from a life insurance policy is paid free of any federal tax.
One of the most important questions to ask when evaluating life insurance needs is the amount of coverage needed. Many financial planners recommend an amount of five to seven times gross annual salary as a guideline when purchasing life insurance, but as with all things in life, each family's goals are different. It is always best to take an inventory of your family's current financial situation and then try to evaluate future needs. Listing current and anticipated future expenses, as well as income sources is a good place to start. If there are children, you might want to consider the cost of their education. The younger the children, the more of a need for coverage, due to the length of time they will be dependent on one parent, in the event of a death of a parent. Of course, this is exactly the time when a family may have the least amount of income available for insurance!
This is why there are different types of policies available. The two broad categories of life insurance are :
· Term Life Insurance
· Permanent Life Insurance
Term Life Insurance provides protection for the pure cost of insurance for periods of 5, 10, 15, 20 or 30 years and is usually significantly less expensive than permanent insurance. The death benefit is only paid if you die during the specific term of the policy. At the end of the term, the policyholder may be able to convert to a permanent policy or begin a new term, at a higher cost.
Permanent Life Insurance provides protection as long as you continue to pay your premiums, which can be fixed or tailored to your specific needs. Permanent policies include Whole Life, Universal Life and Variable Universal Life. These policies have a "cash value" feature, which means part of the premiums go into an account which builds up monetary value over time. This is why the cost of a permanent policy is higher than term. Many times a combination of the two types of policies can provide coverage and savings in stages for a lifetime. Feel free to contact me if you would like to review your insurance needs.
IRS Deadline and Retirement Plan Deferral Limits
For those of you still wanting to make an IRA contribution for 2006, the IRS deadline is April 17, 2007. The limit for 2006 is $4,000 with a catch up contribution of $1,000 for those 50 & older. The contribution limits for 2007 will also be $4,000 and the catch up will remain $1,000. Maximum salary deferrals for 401k, 403b and 457 plans is $15,000 for 2006, and for 2007 the deferral limits increase to $15,500. The annual catch up amount, which can be deferred into these plans for those 50 and older, is $5,000 for 2006 and will remain the same for 2007.
Whether you are saving for retirement, retiring soon or already retired, there are many ways to protect and grow that nest egg and consolidate assets. Developing multiple income streams in retirement is advantageous.
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.johnkaighn.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 NASD & 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: jerseybenefits@yahoo.com
http://www.jerseybenefits.com/
http://www.johnkaighn.com
All opinions expressed in this newsletter are solely those of John Kaighn & Jersey Benefits Advisors, formerly known as Kaighn Financial Services.
The markets began the new year adding to the gains of 2006 with the DJIA racing to a high of 12,786.64, the S&P 500 increasing to 1,459.68 and the NASDAQ reaching 2,524.94 before hitting some headwinds in February. At the close of the first quarter, the DJIA was down 0.9% for the year closing at 12,354.35, while the S&P 500 closed the quarter up 0.2% at 1,420.86 and the NASDAQ finished at 2,421.64 up 0.3% for 2007. While the Dow is still above its high set during the Tech Wreck of 2000, the S&P 500 still has not reached it previous high of 1,527.46, which is a technical feat I feel needs to happen for this bull market to continue. Since the S&P 500 is an index that tracks a broad range of large companies, its march toward the all time record is an indicator of the overall health of the market and the economy.
The headwinds I spoke of earlier came in the form of higher oil prices, Greenspan's recession remarks and the slumping housing market. Oil prices have been bouncing around between $60 and $67 a barrel, rebounding from just under $60 a barrel in January. The tensions in the Persian Gulf over British sailors being taken hostage by the Iranian Navy (shades of 1979) has been the latest culprit fueling the rise in the price of oil.
Greenspan's speech placing the odds of recession in 2007 at 25% stopped the market's advance in its tracks in February. It should really come as no surprise that the possibility of a recession exists, especially since we are in the mature phase of the current expansion, know as prosperity. There are many factors which could tip the economy into negative growth and end this current expansion, but that is just the nature of the economic cycle. For the foreseeable future, it looks as if interest rates will remain on hold and growth will continue to ease from the pace of 2006.
One of the biggest drags on the economy of late is the continued slump in the housing market exacerbated by the concern that the meltdown in the sub prime mortgage market will spill over into the prime market. While defaults by borrowers are increasing, which in turn has caused bankruptcies by lenders, the real concern is how the sub prime debacle will effect the many derivative investments which have been securitized from these sub prime loans. Mortgages in many cases are not held by the companies that write them, but are bundled into securities and sold to investors to spread the risk. As the value of these assets declines, banks, hedge funds and private equity firms head for the exits. This unwinding of positions always leaves someone "holding the bag". I hope the risk management tools used in the collateralized mortgage obligation market are better than the risk management tools used by Amaranth Advisors in assessing the risk of the natural gas markets in September 2006!
Just to add a touch of irony to the current rage of private equity ventures taking public companies private, the granddaddy of private equity firms, Blackstone Group, has filed its plans to go public. Blackstone has been highly successful and according to Mike Santoli of Barrons, " Blackstone will have little problem achieving a $40 billion market cap", and no doubt, "it will become a core holding in an alternate asset management sector." The stock will "open with a big pop-which means it immediately will be unattractively valued. The idea of having access to permanent capital rather than dialing up pension funds for every cent Blackstone invests makes some sense. In other words, you can respect the logic of the deal without buying the stock."
Have You Reviewed Your Life Insurance Lately?
When was the last time you took a serious look at your life insurance coverage. Life insurance was created to provide cash for your family in the event of your death. The goal being to provide your beneficiaries a means to ease the financial burden that results from the death of a parent or spouse. The beneficiaries may choose to use the benefits of a life insurance policy in any way they choose, such as paying for funeral expenses, covering mortgage payments or investing the proceeds and taking systematic payments to augment income. Generally, the death benefit from a life insurance policy is paid free of any federal tax.
One of the most important questions to ask when evaluating life insurance needs is the amount of coverage needed. Many financial planners recommend an amount of five to seven times gross annual salary as a guideline when purchasing life insurance, but as with all things in life, each family's goals are different. It is always best to take an inventory of your family's current financial situation and then try to evaluate future needs. Listing current and anticipated future expenses, as well as income sources is a good place to start. If there are children, you might want to consider the cost of their education. The younger the children, the more of a need for coverage, due to the length of time they will be dependent on one parent, in the event of a death of a parent. Of course, this is exactly the time when a family may have the least amount of income available for insurance!
This is why there are different types of policies available. The two broad categories of life insurance are :
· Term Life Insurance
· Permanent Life Insurance
Term Life Insurance provides protection for the pure cost of insurance for periods of 5, 10, 15, 20 or 30 years and is usually significantly less expensive than permanent insurance. The death benefit is only paid if you die during the specific term of the policy. At the end of the term, the policyholder may be able to convert to a permanent policy or begin a new term, at a higher cost.
Permanent Life Insurance provides protection as long as you continue to pay your premiums, which can be fixed or tailored to your specific needs. Permanent policies include Whole Life, Universal Life and Variable Universal Life. These policies have a "cash value" feature, which means part of the premiums go into an account which builds up monetary value over time. This is why the cost of a permanent policy is higher than term. Many times a combination of the two types of policies can provide coverage and savings in stages for a lifetime. Feel free to contact me if you would like to review your insurance needs.
IRS Deadline and Retirement Plan Deferral Limits
For those of you still wanting to make an IRA contribution for 2006, the IRS deadline is April 17, 2007. The limit for 2006 is $4,000 with a catch up contribution of $1,000 for those 50 & older. The contribution limits for 2007 will also be $4,000 and the catch up will remain $1,000. Maximum salary deferrals for 401k, 403b and 457 plans is $15,000 for 2006, and for 2007 the deferral limits increase to $15,500. The annual catch up amount, which can be deferred into these plans for those 50 and older, is $5,000 for 2006 and will remain the same for 2007.
Whether you are saving for retirement, retiring soon or already retired, there are many ways to protect and grow that nest egg and consolidate assets. Developing multiple income streams in retirement is advantageous.
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.johnkaighn.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 NASD & 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: jerseybenefits@yahoo.com
http://www.jerseybenefits.com/
http://www.johnkaighn.com
All opinions expressed in this newsletter are solely those of John Kaighn & Jersey Benefits Advisors, formerly known as Kaighn Financial Services.
Subscribe to:
Posts (Atom)
