This morning Exxon, the largest energy company in the world reported record profits of $10.36 billion for the second three months of the year. This was up from $7.64 billion from the same period a year ago. You will notice that the earnings were just shy of the record $10.71 billion they reported i…
This morning Exxon, the largest energy company in the world reported record profits of $10.36 billion for the second three months of the year. This was up from $7.64 billion from the same period a year ago. You will notice that the earnings were just shy of the record $10.71 billion they reported in the fourth quarter of last year, 2005. All companies have cushions; the accountants call them reserves. There is always flexibility in the reporting of a company’s earnings. Exxon very easily could have used their flexibility to come in with earnings that were below last year’s fourth quarter record in order to avoid the embarrassment of posting another new record quarter. The company knows that the Congress is looking over Exxon’s shoulder because the American people are looking over the government’s shoulder. This is especially true with Congressional elections, and both houses of Congress up for grabs.

Every President of the United States has paid lip service to American energy independence. It’s like listening to the President’s State of the Union Address. The last seven Presidents within 1 minute of speaking at the State of the Union have always said, “I am please to report tonight that the State of the Union is strong,” with emphasis on the word strong. Each President has proclaimed the need for energy independence, and then has always backed down from doing anything about it.

The answer by the Democrats is to create a tax to confiscate or simply take away what they deem to be excess profits that Exxon, and its associates are making. The Republicans pine away about the need to open up the Southeast coast of Florida to offshore exploration, as though that’s going to bring in millions of barrels per day. The answer is that both parties are wrong. Exxon is simply tacking onto OPEC dictated price the Arab states wish to charge us. It’s more complex than that, but not by much.

Decades ago, the oil world was run by the seven largest oil companies on the planet, most of them American owned. For those of you old enough to remember back in 1973, the Arabs use an embargo against the United States, and all countries supporting Israel. The big oil companies in the United States controlled, and received 60% to as high as 65% of all the revenues generated by the Arab states.

The first cartel was formed back in 1960. From 1960 until 1973, OPEC which is the Organization of Petroleum Exporting Countries had very little power (we mean leverage) over the oil companies. In 1973, that certainly changed. By then the United States was bringing in daily about 35% of energy needs from overseas. Inflation was rampart; commodities in general were rising out of sight, and then all hell broke loose.

The Egyptians and the Syrians attacked Israel on two fronts. The date was Octobers 6, 1973. With the secret support of then President Nixon every weapon short of nuclear was ordered to be flown to Israel to save the Jewish state. Israel was successful in repelling the invasion, but OPEC two weeks later put an embargo against oil shipments to the United States. The Arabs then raised prices for our European allies by 70 plus percent from $3 to more than $5 per barrel. We are now at $70 plus per barrel by comparison with no adjustment for inflation.

In the 1970’s, our economy was much more intertwined with oil, and energy than it is today. We have learned to become more efficient with our machines and processes. Back then, we were propelled into a recession by the dramatic increase in oil prices. Europe went deeper into recession than we did. The lessons haven’t been forgetten, but they haven’t been learned either.

There has been no attempt by the United States for over 30 years to even begin a program of true energy independence. The answer is not to penalize efficiently run Exxon for knowing how to be extremely profitable. Remember the first principle of politics, people vote with their feet.

The Seven Sisters (giant oil companies) who controlled oil prices and policies for generations ceded that power in 1973 to the Arab states. Oil unfortunately is in all the bad neighborhoods of the world, and that’s not going to change. We are at the mercy of Arab pricing for a commodity that is the oxygen of our economy. If Arab oil stops shipping tomorrow, every car and truck, train, and plane would grind to a half shortly thereafter. The United States would have to go to war to maintain our economy and the bad guys know this. They will only push us so far, and no further.

The Arabs want our economy and our Western Europe friends to continue to grow. They want China, and the Pacific Rim to continue to grow. Only through growth can the world afford to pay for Arab oil. They do not want to gouge us, or anger us. It’s not in their interest. They do want to extract the maximum amount we are willing, and able to pay for a barrel of their liquid gold.

One of the consequences of this action is the position that GM finds itself in, and perhaps Ford is in a worse position. GM and Ford are selling cars with obsolete technology, fuel inefficiencies, in a world of Japanese competitors chomping at the bit waiting to assume the title of the largest car company in the world.

Our legacy airline companies are now in the position of having a profit statement that is inversely connected to the price of fuel. Eighteen months ago you could fly a 747 from California to Europe for $30,000 in fuel costs. Today the fuel cost is more than $100,000, and getting more expensive.

If the United States wants to achieve energy independence, we must do what France has done. Our electrical generation like France should become nuclear based over the next 15 years. For those who shudder, and cry when they hear the world nuclear, let them know that for more than 50 years the US Navy has had hundreds of vessels run by nuclear power and there has never been a nuclear incident with one of them.

Our cars have to be modeled along European lines. The Europeans have been paying more than $5 per gallons for years and they have learned to deal with it. If GM and Ford can’t handle the problem, the Japanese car companies will handle it for them. After all, the Japanese have been eating Detroit’s lunch for years. Why should it change?

Goodbye and good luck

Richard C. Stoyeck
StockAtBottom.com

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Before becoming successful in foreign currency trading, you must learn the language. Forex has it”s own terminology and it can get quite difficult to understand. It may be that you have no idea what EUR/USD=1.5442 means and if someone mentions PIPS, you immediately think of Gladys Knight. Hopefully…
Before becoming successful in foreign currency trading, you must learn the language. Forex has it”s own terminology and it can get quite difficult to understand. It may be that you have no idea what EUR/USD=1.5442 means and if someone mentions PIPS, you immediately think of Gladys Knight. Hopefully this will clear things up a bit for you and prepare you for automated Forex trading.

Accounts = A standard account is usually traded with at least 100,000 units of the base currency. A mini account trades a lot of 10,000 units of the base currency. A micro account trades the base currency with 1,000 units. Higher lots will do the best when Forex trading. Pips tend to be worth less with mini and micro accounts. Automatic Forex trading can be done with as little as $500.00 dollars.

Currency pair = the normal quote of each set of currency. Most are listed to the 4th decimal point. The exception is the Japanese Yen, it is only quoted to the 2nd decimal point. The first currency listed is the base currency and always has a value of 1. The second currency listed is the quote currency and has a value as listed after the equal sign. This number is also known as the bid/buy price. With a quote listed as such EUR/USD=1.5442, one Euro is worth 1.5442 US Dollars. Pretty easy so far, huh? Automated Forex trading programs make trading currency even easier.

Limit = Limit orders are orders placed to buy at a specified price and sell at a specified price. The goal of course is to make a profit. A long position trade is when a profit is made by buying low and selling high. A short position trade is selling high and buying low in hopes of making a profit. These limits can be programmed into automated Forex Trading programs along with signals.

Pip = Percentage in point. This is the lowest price difference of a currency value change. Since most currencies are quoted to the 4th decimal point, the smallest change is 1/100th of one percent. This is also called a basis point. One basis point is equal to one Pip. So with the example of EUR/USD=1.5442, a move to 1.5450 would be 8 pips. The value of a pip can be fixed or variable. This is important to understand when planning a Forex trading strategy.

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The late Senator Everett Dirksen is credited with the line, “A billion here, a billion there, and soon you”re talking about real money.” Financial planners might substitute “million” for “billion” to get an insight into the market for small group retirement plans.

By itself, a retirement…
The late Senator Everett Dirksen is credited with the line, “A billion here, a billion there, and soon you”re talking about real money.” Financial planners might substitute “million” for “billion” to get an insight into the market for small group retirement plans.

By itself, a retirement plan sponsored by a small business or a professional practice might be modest, with $1 million or less in assets. By pursuing several plans, though, advisors may discover that “real money” is attainable.

According to tables published this year by the U.S. Department of Labor, assets of pension plans with fewer than 100 participants rose from $32 billion in 1975 to $526 billion in 2005, a 15-fold increase. Defined contribution plans (including profit-sharing and 401(k) plans) went from under $25 million to roughly $500 billion.

“Most small companies don”t have retirement plans,” says Dan Maul, president of Retirement Planning Associates in Kirkland, Wash. “Many of them will install plans in the future, so this could be a huge potential market for planners. Generally, large providers of retirement plans have not been active in this area.”

Small group plans can be indirectly profitable, too, if they provide leads to individual clients. Planners may find intangible rewards as well, as their staffers” morale improves through helping people who might not be their typical clients.

Tracking Targets

Just as financial planning clients may be asked about their goals, so planners might start their pursuit of the small plan market by setting objectives. Is the small plan market attractive on its own, or is it a necessary adjunct to planning for certain clients?

“We work with small company plans as a service to clients who are business owners,” says Kathy Stepp of Stepp & Rothwell, a financial planning and investment advisory firm in Overland Park, Kan. “Our clients pay us an annual retainer for comprehensive planning. If they own a business, we will recommend types of retirement plans for their companies and the investments that might be offered. That”s part of our value-added service.” The plan itself is not a client, though.

Other advisors target small company plans as clients. They may set their sights on particular types of small companies.

“Last year, we began marketing our services to professional practices in our area,” says Cheryl Holland, president of Abacus Planning Group in Columbia, S.C. “So far, we have added six firms. We contacted these practices through people we know, but the principals of the firms have not been existing clients of ours.” Holland says her targets have been professional practices with existing retirement plans with at least $3 million in assets.

Chris Long, a financial planner in Chicago, focuses on another type of small plan: those of nonprofit organizations, especially social services agencies. “One of my clients is the executive director of such an agency,” he says, “and I helped her set up a plan for her organization. I liked working with this group and I realized the need was huge, so I”m starting to market in that area.” Long says he prefers to work with nonprofits, where a designated person (not the executive director) is in charge of finance and administration; generally, organizations with 25 or more employees will have such a specialist.

Making Connections

Long”s experience with a nonprofit”s executive director may be a typical example of how a planner can get started in the small plan market. A client who needs financial planning advice also desires help with setting up, reviewing or improving a company retirement plan.

A similar story is related by Dan Galli, a planner in Norwell, Mass. “I was a teacher before I went into financial planning,” he says, “so I started working with teachers. One teacher was married to a business owner, so I helped create a retirement plan for his company.”

Galli then went a step further: He signed up to teach courses about retirement planning, employee benefits and other subjects for the CFP program at Northeastern University and now teaches them for the Kaplan/Bisys/Boston University review for the CFP comprehensive examination. “In order to teach the courses, I had to study about the various types of retirement plans,” he says. “Teaching has given me credibility in this area. Now, I get referrals from CPAs, attorneys and insurance agents.”

Planners interested in the small plan market may get prospects by referrals, marketing or tapping their existing client base. Faced with these prospects, planners should have an idea of just how much of a role they want to play in small company retirement plans. Typically, doing it all is impractical.

“Planners eyeing this market should make good friends with a TPA,” Maul says, referring to third-party administrators. Such firms, or another retirement plan provider, can handle recordkeeping and help see that plans comply with regulatory requirements, which have become more onerous since the Pension Protection Act of 2006 (PPA), Maul notes. He says that planners may need at least one TPA to handle 401(k)s, plus another TPA for other types of plans, such as simplified employee pension (SEP) and savings incentive match plan for employees (SIMPLE) plans. Long points out that a TPA might supply a platform for choosing funds, handling recordkeeping, offering a website to participants, and performing tracking for nondiscrimination testing, an IRS provision that requires plans to offer substantive benefits for rank-and-file employees in order for the company to reap 401(k) tax benefits.

Ed Fulbright, a CPA and financial planner in Durham, N.C., says that he recently began seeking small plan business by working with The Online 401(k), a San Francisco-based company that provides web-based retirement plans for small companies. “The services are comprehensive and the fees are competitive,” he says. “We”re using The Online 401(k) for our own firm”s retirement plan. The next step is to focus on our current client base, including accounting clients, to see who would be interested.”

Choosing a Plan

Clients and prospects may be interested in sponsoring a retirement plan, but uncertain about choosing among all the available varieties. “Planners can help by discussing objectives with business owners and professionals,” says Galli. “Some plans are best for those individuals who want to maximize contributions for themselves, while others can work well for those who want to provide a real benefit to their employees.”

If enlarging the business owner”s nest egg is a prime concern, defined benefit plans (traditional pension plans) may be a good choice. “We have seen an upsurge in defined benefit plans in the past few years,” says Ron Paprocki, CEO of MEDIQUS Asset Advisors, Chicago. “We work with physicians, and they seem to be more interested in retiring, rather than working indefinitely, than they were in the past. Doctors may want to build up a large fund as quickly as possible, which you can do with a defined benefit (DB) plan.”

In a DB plan, a large fund is necessary in order to provide lifelong cash flow to pensioners. When a participant is a middle- aged, high-income professional or executive with relatively few years until his or her planned retirement, tax-deductible contributions can be impressive. “When you combine a defined benefit plan with a defined contribution plan,” Paprocki says, “a medical practice could put in $120,000, even $150,000, per partner physician this year.”

With a defined contribution plan alone, a highly compensated participant can put in as much as $51,000 this year, assuming he or she is at least age 50 by December 31-for younger folks, the $46,000 cap applies. The most common way to get to $46,000 or $51,000 is via a profit-sharing plan that includes a 401(k) provision. That way, rank-and-file employees can contribute to the plan.

“Aside from defined benefit plans, the small company plans we see are divided fairly evenly between 401(k)/profit-sharing combinations and SIMPLE IRAs,” Maul says. The maximum SIMPLE contribution this year is $23,500 to a high-earning employee, including a required employer match and the 50-plus catch-up. Thus, groups with participants who”d like a larger contribution this year may favor the profit-sharing/401(k).

For many companies, though, the SIMPLE IRA limits are sufficient. “SIMPLE IRAs may work well for companies such as restaurants, which have high turnover and low-paid employees,” says Maul. Employers may exclude from a SIMPLE IRA employees who are expected to earn less than $5,000 during the current calendar year and have not earned at least $5,000 in any of the preceding two years.

Joan Valenti, a planner with LPL Financial in Farmington, Conn., says she also likes one-person 401(k) and SEP plans for small groups. So-called solo-K plans are for groups composed only of owners and their spouses; in some cases, tax-deferred contributions may be greater than they would be with other types of plans.

“SEPs might be a good choice for companies in which most of the highly paid employees are owners and family members,” Valenti says. As the name suggests, a simplified employee pension (SEP) may require minimal paperwork, yet deductible contributions can go as high as $46,000 per participant in 2008.

Safety First

Although SEPs and SIMPLEs have their merits, 401(k) plans remain among the most popular (and perhaps the most familiar) retirement plans for small groups. In the PPA, Congress officially approved automatic enrollment for 401(k) plans. With an automatic plan, all eligible employees are enrolled in a company”s 401(k) plan unless they opt out. Typically, a certain portion of their pay-often 3%-is listed as a default contribution, while many employers offer a 25% or 50% match as a sweetener. Employees can increase or decrease their contribution or leave the 401(k) plan altogether. “Almost no one makes a negative election to opt out of automatic enrollment,” Long says. Thus, overall participation may be increased dramatically.

Planners have mixed reactions to putting a 401(k) on automatic. “I think you can make the case for automatic enrollment, based on the likelihood of individuals who would typically not participate being pulled into the plan,” says Diahann Lassus of Lassus Wherley, a wealth management firm in New Providence, N.J. “The con side is that the small percentage of pay typically used in automatic plans doesn”t provide the level of savings that most folks really need. It”s good to get more people into the saving mode but we need to encourage those who do save to increase the percentage of saving.”

Damon Dyas, a planner with Ameriprise Financial Services in Southfield, Mich., points out another potential flaw. “The employer may still need to go through testing of the plan,” he says. That is, unless enough of the rank and file contribute enough of their pay to the plan, key executives may be limited in the amount they contribute. Automatic enrollment might help the plan pass the required tests so highly compensated executives can maximize their contribution, but that”s not automatically the case.

While automatic enrollment has pros and cons, another 401(k) feature enjoys more widespread acceptance. “Safe harbor is almost always included in 401(k) plans for small groups,” Maul says. A safe harbor 401(k) meets IRS requirements through employer contributions or matches plus other features, and therefore does not have to undergo discrimination testing. As a result, highly compensated participants can maximize contributions, regardless of what the rest of the staff does.

Whether an employer wants automatic enrollment or safe harbor (or both or neither) features for a 401(k), another relatively new option is available: “A Roth 401(k) can add value,” Stepp says. “It”s the only way that some upper-income people can have a Roth account now.”

Roth IRAs and Roth 401(k)s accept after-tax contributions and promise completely tax-free distributions in the future. Roth IRAs have income limits that won”t disappear until 2010, when any IRA will be convertible to a Roth IRA if the client pays the deferred income tax. There are no income limits for participants who want to contribute to a Roth 401(k) in 2008, and contributions can range up to $20,500.

No matter what features are added to or excluded from a 401(k) plan, the issue of an employer match should be addressed. “I encourage a match,” Long says. “I believe that it”s better to match 25 cents or even 10 cents on the dollar, for 6% of pay, than to match 100% of 1% of pay. Extending the match gives employees an incentive to save more.” While some employers will like the idea of motivating employees to save, others may need to be convinced that a match will pay off in recruiting workers or improving retention.

Investment Insights

Planners might not have to be experts in retirement plan design, although a certain knowledge is helpful in seeing that a plan fits a particular group. On the other hand, advisors generally are expected to play a key role in determining the investment options within the plan.

A planner can make his or her expertise apparent, beginning with the initial discussion. “Many employers are not aware of the breadth of issues involved in sponsoring a retirement plan,” says Long. “I help them by preparing an investment policy statement, which most small plans don”t have. Such a statement can spell out a plan”s reporting requirements, for example, as well as its intent to offer multiple asset classes and its aim to have investments with reasonable fees.”

If a plan is “pooled,” meaning that common investments are chosen for all participants, the planner can help make the choices. Alternatively, retirement plans may call for participants to select from a list of investments. “A law firm might have 15 partners, all of whom want to self-direct their accounts,” Holland says. Here, a financial advisor can help decide what options will appear on the menu.

“I prefer passive investments,” says Christopher Van Slyke, managing director of Capital Financial Advisors, a financial advisory firm in La Jolla, Calif. “Most active managers don”t beat the market averages, so it”s difficult to justify the extra costs. Over a long time period, low-expense investments have a substantial advantage.”

Long says small firms often have steep expenses in their 401(k) plans and thus chooses low-cost index funds for clients” plans. “They are unaware that high costs might reduce an employee”s retirement savings by 20% to 40% over a career.”

As might be expected, other advisors favor including a few actively managed investment choices. Galli says that his preference is to provide participants with the opportunity to choose among various strategies or to mix and match. “If possible, I like to see a plan have several index funds and some good actively managed funds. There can be some target-date funds as well.”

Target-date funds rebalance automatically and are designed to grow more conservative (fewer stocks, more bonds) as a specific retirement year approaches. “They may be good for participants who want a really hands-off approach to investing,” Galli says. Target-date funds have been approved by the U.S. Department of Labor as a default option in automatic enrollment plans. Backed by this federal seal of approval, they are increasingly found in small group plans.

Face-to-Face

Some planners may be content to devise investment strategies for small group plans and monitor performance. “Other advisors also get involved in educating the participants about their investment choices,” says Holland. “Before the Pension Protection Act became law, we had limits on what we could say. Now we can come up with choices.”

Holland says her firm”s effort to attract professional practice retirement plans includes holding one-hour group meetings to explain the plan and half-hour meetings with individual employees. “We are comprehensive planners, so we get into issues beyond the plan investments,” she says. Valenti and her associates frequently handle participants” questions about the tax savings that stem from 401(k) contributions.

According to Holland, it”s too soon to tell whether her firm”s small plan initiative will pay off financially. But some positive results are already apparent. “These meetings have energized our staff,” she says. “They”re excited to be branching out, working with people who might not ordinarily be financial planning clients. That”s especially true for the younger people at our firm, who may be advising workers their own age.”

But the profit and business growth potential is always there. Highly paid executives may become personal financial planning clients. What”s more, opportunities among the rank and file shouldn”t be ignored, according to Galli. “An employee might have a high-earning spouse,” he says, “or there may be someone who inherited money.” Helping participants with retirement plan investments might lead to more lucrative engagements.

Indeed, Valenti counts a dozen small group plans among her clients. “Over the years, I have gotten at least 100 individual clients through these plans. Together, those clients and the retirement plans now account for about 25% of my practice.”

Planned Payoff

Small group plan start-ups may not be profitable for advisors. “You”re working with a lot of small deposits,” Valenti says. “They can become profitable once they get up to about $500,000 in assets. If you take over an existing plan that size, you may make money right away.” Whether or not the plan itself is a moneymaker, planners can benefit if their work benefits existing clients or helps to attract new ones.

Many planners charge a fee that”s a percentage of the assets in the plan. Others may receive commissions for products. Long takes a third approach: “I charge a flat fee, plus a fee that”s based on the number of employees in the plan,” he says. His fee for a $1 million plan with 50 employees might range from $7,000 to $12,000 a year, depending on the services he provides.

“As you add more small retirement plans, the more profitable this business can be,” Long continues. “There are more similarities between small retirement plans than between individual client situations, so you can automate some of the things you do and rely on your staff to execute. You”ll benefit from economies of scale.”

What”s more, the prospects for growth are bright. “Business owners and professionals are more responsive now than in past,” Valenti says. “They know they”re responsible for their own retirement; they”re not counting as much on Social Security.” The PPA may help planners build this business. “Many people, including employers and their attorneys, have become more aware of fiduciary issues since the act was passed,” says Van Slyke. “Small companies want to work with a real advisor instead of a salesperson. Indeed, carefully executed retirement plans can help planners find big profits in small places.

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For more information, visit our website at http://www.financial-planning.com — the leading resource for the informed independent advisor.

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When a house property is listed for sale in the market, the buyers will come with different price ranges to purchase the house property. To purchase the house property, the buyer should have enough price consideration for the property. Most buyers do not have enough cash to purchase the house. To b…
When a house property is listed for sale in the market, the buyers will come with different price ranges to purchase the house property. To purchase the house property, the buyer should have enough price consideration for the property. Most buyers do not have enough cash to purchase the house. To buy the home the buyers would search for obtaining finance through mortgage. To purchase the house property, the buyer is to obtain the mortgage from any of the institution, banks, and mortgage lenders and so on. In order to evaluate the financial plans of the buyer, financial strategies are to be evaluated. Financial details are the major reasons that are included in the offer price.

Down Payment

Down payment is the initial payment made by the buyer to the seller for the purchase of the house property. This down payment is to be disclosed properly by the buyer at the time of purchase. As part of the offer price, the amount or volume of the down payment is to be decided by the buyer. At the time of down payment the seller will evaluate the possibility of the house buyer obtaining the home loan. When the buyer make large down payment, it is easier for the buyer to obtain the mortgage approval. The underwriting guidelines for this will be less restrictive. Down payment is the financial aspect which will affect your financial requirement.

Influence of Interest Rate

The other aspect that includes in the financial requirement of the purchase is the interest rate offered by the mortgage lenders and banks. To protect the buyer against the financial shortage, the interest rate offered by the institution is to be less. When interest rate paid by the buyer is more, then the buyer will be afraid of buying the house property. Interest rate is the financial drawback for the buyer. To purchase the home property the buyer will obtain the mortgage from the mortgage institution and banks with the high interest rate. If interest rate rises quickly, the mortgage payment paid by the buyer will be higher. When interest rate offered is more then the buyer can close the contract. Interest rate also affects the financial aspect of the buyer.

Financial Incentives

The seller may sometimes ask the buyer to pay of the price consideration in single payment. In such a situation, the buyer may ask incentives to the seller regarding the payment. When the incentive is asked to the seller, the seller may sometimes provide the incentive to the buyer. Here the seller may negotiate the price. Financial incentives are the main consideration to be considered by the buyer at the time of purchase. The buyer can ask the seller to provide the loan to him for the purchase of the house property.

Seller Financing

Obtaining the loan from the seller is called seller financing. It is a second mortgage which helps the buyer to facilitate the home purchase. The benefit for the buyer is that combining the down payment with the second mortgage from the seller, will avoid paying mortgage insurance and also save money.

You are the individual who make home purchase offer through cash, it makes the sense to provide the documentation for the funds available. The offer should contain information whether you obtain fixed rate or adjustable rate of mortgage. The offer should also state whether you are obtaining conventional financing or any other loan.

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Our stock research has come up with an interesting concept for you to focus on. Citigroup is in the press these days because its stock price has failed to keep up with that of its competitors including Bank of America, Wells Fargo, and JP Morgan Chase. The chairman of Wells Fargo, Richard Kovacevic…
Our stock research has come up with an interesting concept for you to focus on. Citigroup is in the press these days because its stock price has failed to keep up with that of its competitors including Bank of America, Wells Fargo, and JP Morgan Chase. The chairman of Wells Fargo, Richard Kovacevich is acknowledged to be the finest banking CEO in the business, but doesn’t receive the press because no one can pronounce his name. Citigroup is up about 17% under the current CEO while cross-town rival J.P. Morgan Chase has gained more than 40%, and Union Bank of Switzerland (UBS) more than doubled. Reliable Goldman Sachs is up over 150%. Is anybody listening? You bet they are.

Chuck Prince, who took over Citigroup after the departure of the fabulously successful Sandy Weill, is now getting excoriated by the financial press because Citigroup’s stock price has seriously lagged that of its rivals noted above. When you’re down, they kick dirt on you as the saying goes. The press has gone out of its way to jump all over the firing of Todd Thomson who ran Citigroup’s wealth management division. Apparently the biggest recipient of the wealth management division was Mr. Thomson himself, who made extensive use of the bank’s private jet fleet, when he wasn’t tooling around town in his Lamborghini. Very conservative car for a banker, huh?

Statements have been made that Thompson committed $5 million of Citigroup’s money to a new television program featuring CNBC’s Maria Bartiromo, and Hollywood A-List actor Robert Redford. If that doesn’t beat all, he had a wood burning fireplace installed in his office at Citigroup to keep warm while figuring out new projects to spend the bank’s money on. He flew to China with a group of Citigroup executives, and then left them to find their way back home, while he flew back with an undisclosed companion. I guess those corporate jets get cramped with a couple more people aboard.

What a guy, what a management team, what does any of this say about Citigroup’s inability to stay pace with its competitors financially after Sandy Weill’s departure, and Chuck Prince’s ascent to the helm of the ship? It says plenty, here’s why.

Back in the 1930’s, the Federal government under FDR decided to separate the banking industry from the investment industry. It was called the Glass-Steagall Act. Brokerage firms and banks had to make a decision. You could be a bank, or you could be a brokerage company. You could not be both. Firms like JP Morgan and company decided to remain a bank. The investment partners at JP Morgan walked out and formed Morgan Stanley, so that they could remain in the capital formation business.

Only one company by law was allowed to remain in both functions. It was Brown Brothers Harriman. FDR specifically decided to do a favor for his supporter Averill Harriman who controlled the family bank. Just for your information, President Bush’s ancestral grandfather was a prominent banker at Brown Brothers. He ran the show, his name was Prescott Bush. For the next six decades it became apparent, separating the banking and investment functions was a good idea. Something else became apparent.

The mentality necessary to run a bank was radically different from the managerial expertise necessary to run a successful brokerage firm. In my 35 years of involvement with Wall Street, I have only seen one successful integration of a commercial bank with a Wall Street firm. Only Sandy Weill was able to pull it off, and he did it by combining Citibank with Salomon Brothers, and Smith Barney. Weill also managed to get Bill Clinton to get the Glass-Steagall Act repealed so that Weill could fulfill his personal vision.

No one else in history had been able to do it, and nobody else has successfully merged a bank with a brokerage firm function, nobody. Prudential failed with Bache. Bank of America failed when it bought Charles Schwab and Company. Schwab and Company failed years later when it bought US Trust. Arguably the best managed company in America was General Electric under Jack Welch. GE and Welch failed when they took over Kidder Peabody. GE walked away a couple of years later with billions in losses.

It seems that banks and brokerage firms just don’t mix. Brokerage firms and other commercial type entities like General Electric don’t mix either. The nature of risk is different for a bank versus a brokerage firm. Sandy Weill himself sold Shearson Lehman Brothers to American Express years ago. The merger failed once again, and Weill considered it the major setback of his career. It takes a certain type of manager to assess, and handle a brokerage firm’s risk versus a bank. This concept keeps coming home to haunt companies that try their hands at both.

Is Citigroup a VICTIM of this MINDSET?

We believe that they are. We believe that the historic inability of a bank management team to run a brokerage firm has now reared its head once again in results we are seeing at Citigroup. Chuck Prince, the handpicked successor to Sandy Weill upon Weill’s departure is a lawyer by training. The same is true for the new CEO of Home Depot. We believe that the experiences that legally trained minds endure, is wholly unsuited for the world of the superstar CEO’s which is now the norm among the Fortune 500.

Citigroup for the last 15 years has had very large Mid East financial interests involved as shareholders. Those interests are now asserting themselves. They are demanding that the bank cut expenses. It’s really very simple. MONEY wants to make MONEY. Chuck Prince in turn has promoted former deputy Robert Druskin, as chief operating officer. They are actually referring to Druskin as the “expense czar”.

In our opinion, the actions taken so far will not be sufficient to reverse the lag that Citigroup is suffering from. Citigroup suffers an inability to mould historically disparate global operations together. They are not generating superior returns. Investment management, corporate lending, and wealth management just don’t jell, and hasn’t since the 1930’s. Extraordinary CEO’s and visionaries like Sandy Weill come along once in a generation, and Citigroup doesn’t look like it’s going to be blessed twice. Stay tune for more fireworks before this stock becomes a buy.
Goodbye and Good Luck
Richard Stoyeck
Value Investing at StocksAtBottom.com

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What you can see by looking at weekly highs and weekly lows is whether or not the big money players are bullish or whether they’re bearish. I will give you the punch line here. The punch line is, this two dollar level right here is where the opportunity lies. I want you to think about this and r…
What you can see by looking at weekly highs and weekly lows is whether or not the big money players are bullish or whether they’re bearish. I will give you the punch line here. The punch line is, this two dollar level right here is where the opportunity lies. I want you to think about this and right at the edge of this twenty minutes so I am going to have to go quick with this explanation.

The last time the British pound was up at two dollars was 1992 and it didn’t spend a whole lot of time above it. It’s going to take a huge shift in thinking to make the British pound push above two dollars and stay there. If you go back even further; you have to go back to 1978 to see the British pound above two dollars for any length of time. We have some major decision making here.

Again, if you learn nothing else from this, you are going to learn that all of this stuff; all of the charts, all this candlesticks and all of this squiggly lines; all it is doing is showing you the decisions that market participants are making. So follow me here. This is very, very important information. If you want to tell where all the big money is going, you look at the week high and the week low. What do we tell here?

Well you can see here that the low is right there for this week. Well, is it above or below the prior week? Literally, it’s this simple. The easiest answer is it is above, right? If price is moving up does that mean they are bullish or they’re bearish? It means that they are bearish. That was pretty easy.

What about the high? The high is right here. Did the market move above the high the prior week? Absolutely. Again, does that mean they are bullish or bearish? It means that they are bullish. What about this one here? The low is up but the high is at the same level. What does that mean?

It means that they’re digesting. If you were looking at the videos about this time, what you heard me say was that any time the market gets to a logical point; you will typical see this kind of hesitation. It’s perfectly normal and we can anticipate it and we can plan for it.

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There are many ways of investing the money one earns, they could open an account in a bank, deposit the money and let the interest accumulate. Or another option is to invest in stocks and shares and hope for the best, and another category that is fast gaining popularity is Forex trading and investi…
There are many ways of investing the money one earns, they could open an account in a bank, deposit the money and let the interest accumulate. Or another option is to invest in stocks and shares and hope for the best, and another category that is fast gaining popularity is . Dealing in foreign exchange, or currencies, is done by all the leading banks and also by some businesses as well. is where the parties interested do the relevant groundwork, have a good understand about the global markets and know that the trends seen today might not necessarily remain the same tomorrow. Another important aspect to be kept in mind is that one must decide on how much money they can afford to play with, so that even if they incur loses, they should be able to tide over it.

Many say it is an art to be able to deal in and come out a winner. For it requires the brain of an analyst and the judgment of a lawyer to be able to assess the market, and capitalize on it. The different currencies work in different manners and so the person should be able to understand the movement and be in touch with how the different economies function. This has a direct impact on the value of the currency, which in turn reflects on the investments that have been made. Ever since the 1990″s, has become very popular especially among the top range of banks and businessmen who have been playing in the stock market. Many have realized that this trade has more benefits and more returns to offer than the shares do.

If people who are interesting in investing in foreign exchange understand that all investments don”t lead to high returns and that there is a certain amount of risk involved, they will be safe. This will also help them survive the race in the long run suffering fewer losses. The Forex market is not always on the boom, and there could be sudden spurts of ups and surprising lows as well. One must be mentally prepared to face both these situations, for it is known that some get excited when they get lucky and then lose track of reality. They lose control over their finances and end up losing all their savings. A steady mind and a thoughtful approach is what make a person an ideal Forex investor. Good management strategies need to be handled while investing in foreign exchange, as this will ensure that some amount of stable returns come your way. It is not necessary for the parties involved to stay hooked on the computer all day, but enough if they are able to understand the trend and keep watch over the rates every now and then. For someone to come out a winner in this, they need lots of practice and professional guidance so they stay afloat and not lose.

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Stock day trading is the most popular of all day trading activities. In this, trades are completed within a day so that after the closing of stock market, for that day, the trader shall not have any open positions. Stock day trading usually does not involve any overnight risks and are usually free…
Stock day trading is the most popular of all day trading activities. In this, trades are completed within a day so that after the closing of stock market, for that day, the trader shall not have any open positions. Stock day trading usually does not involve any overnight risks and are usually free of margin interests – which are normally charged for overnight open positions. But not all day traders necessarily complete their trades within a day; they may hold their position for better profit on next day. Stock day trading is one of the riskier trading strategies that need trading experience, dedication, time and strong mental setup.

The electronic boom resulting in smarter computers and programs, and faster communication methods is primarily responsible for the popularity of stock day trading. The boom provided market access and data to all who want to trade. The discount brokers offering faster services for very low fees also made day trading easier. Most day traders to day trade from their home with a computer having a direct access (stand alone) trading system provided by the day trading broker. Most brokers provide greater leverage to day traders and give them access to many stock markets by maintaining margins.

Stock day traders follow different strategies to profit from the market like scaling – the trading of greater quantity of stocks in lesser time, news playing – trading according to latest news, range trading – buying on lower support levels and selling on higher resistance levels, momentum or trend trading – trading according to the current trend, and rebate trading – trading stocks which offer better dividends and yields.

As you can see, all the above strategies require one thing – the current/real-time updated stock market information. That is why live/real-time/streaming market data and trading systems are considered vital to day trading. An advanced stock day trading system provides a collection of stock market information, technical analysis tools, visually enhanced graphs, tickers, triggers, alerts and news for day traders. These all help them to pick tradable stocks and to execute the trades faster – in day trading time is profit. Although there is one other version of the trading system, the web-based or broker-side trading system, available that is quiet cheap, it has delay in providing information and executing trades and so are not for stock day traders.

Stock day trading holds both advantages and disadvantages. First of all, it is for experienced traders who made up their mind to face some losses and knows the ways to reduce those losses. The advantages include good profit, high leverage allowing to trade with lower initial investment, no overnight risk, no/reduced margin interests, rapid returns, etc. The other side includes higher chance of loss, high mental pressure, the need for dedication of time and attention, the need to payoff margin interests and transaction costs etc. According to statistics over eighty percent of stock day traders face loss.

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In our article “Define your Goals and Make a Plan” you learned:
• How to define your financial and trading goals.
• How to select the right market for your trading goals.
• What timeframe you should trade in.
• The difference between trading styles and how to find the right one…
In our article “Define your Goals and Make a Plan” you learned:
• How to define your financial and trading goals.
• How to select the right market for your trading goals.
• What timeframe you should trade in.
• The difference between trading styles and how to find the right one for you.
• How to create a basic daytrading plan.
Now that you defined your goals and created your daytrading plan, you need to make sure it really works. Thus far everything might look great, but how can you be sure that the day trading system works when you start trading it with real money?
Evaluating a trading system is easier than you think. Below you”ll find 10 Principles of Successful Day Trading Systems that we developed and refined over the last couple of years. You should use these Power Principles to evaluate your trading system, whether you developed it on your own or think about purchasing one. By checking a system against these principles you can dramatically increase the chances of being successful.
Here we go:
Principle #1: Few rules - easy to understand
It may surprise you that the best daytrading systems have less than 10 rules. The more rules you have, the more likely you “curve-fitted” your trading system to the past, and such an over-optimized system is very unlikely to produce profits in real markets.
It”s important that your rules are easy to understand and execute. The markets can behave very wild and move fast, and you won”t have the time to calculate complicated formulas in order to make a trading decision. Think about successful floor traders: The only tool they use is a calculator, and they make thousands of dollars every day.
Principle #2: Trade electronic and liquid markets
I strongly recommend that you trade electronic markets because commissions are lower and you receive instant fills. You need to know as fast as possible if your order was filled and at what price, because based on this information you plan your exit.
You should never place an exit order before you know that your entry order is filled. When you trade open outcry markets (non-electronic) you might have to wait a while before you receive your fill. By that time, the market might have already turned and your profitable trade has turned into a loss!
When trading electronic markets you receive your fills in less than one second and can immediately place your exit orders. Trading liquid markets you can avoid slippage, which will save you hundreds or even thousands of dollars.

Principle #3: Realistic expectations
Losses are part of our business. A trading system that doesn”t have losses is “too good to be true”. Recently I ran into a trading system with a whopping winning percentage of 91% and a drawdown of less than $500. WOW!
When looking at the details it turned out that the daytrading system was only tested on 87 trades and - of course - curve fitted. If you run across trading systems with numbers too good to be true, then it”s probably exactly THAT: Too good to be true.
Usually you can expect the following from a robust trading system:
• A winning percentage of 60-80%
• A profit factor of 1.3 - 2.5
• A maximum drawdown of 10-20% of the yearly profit.
Use these numbers as a rough guideline, and you will easily identify curve fitted systems.
Principle #4: Maintain a healthy balance between risk and reward
Let me give you an example: If you go to a casino and bet everything you have on “red”, then you have a 49% chance of doubling your money and a 51% chance of losing everything. The same applies to trading: You can make a lot of money if you are risking a lot, but then risk of ruin is very high. You need to find a healthy balance between risk and reward.
Let”s say you define “ruin” as losing 20% of your account, and you define “success” as making 20% profits. Having a trading system with past performance results let you calculate the “risk of ruin” and “chance of success”.
Your risk of ruin should be always less than 5%, and your chance of success should be 5-10 times higher, e.g. if your risk of ruin is 4%, then your chance of success should be 40% or higher.

Principle #5: Find a system that produces at least five trades per week
The higher the trading frequency, the smaller is the chances of having a losing month. If you have a trading system that has a winning percentage of 70%, but only produces 1 trade per month, then 1 loser is enough to have a losing month. In this example, you could have several losing months in a row before you finally start making profits. In the meantime, how do you pay for your bills?
If your trading system produces five trades per week, then you have on average 20 trades per month. Having a winning percentage of 70% - your chances of a winning month are extremely high.
And that”s the goal of all traders: Having as many winning months as possible!

Principle #6: Start small - grow big
Your daytrading system should allow you to start small and grow big. A good trading system allows you to start with one or two contracts, and then increases your position as your trading account grows. This is in contrast to many “martingale” trading systems that require increasing position sizes when you are in a losing streak.
You probably heard about this strategy: Double your contracts every time you lose, and one winner will win back all the money you previously lost. It”s not unusual to have 4-5 losing trades in a row, and this would already require to trade 16 contracts after just 4 losses! Trading the e-mini S&P you would then need an account size of at least $63,200, just to meet the margin requirement. That”s why martingale systems don”t work.

Principle #7: Automate your trading
Emotions and human errors are the most common mistakes that traders make. By all means you have to avoid these mistakes. Especially during fast markets, it is crucial that you determine the entry and exit points fast and accurately; otherwise, you might miss a trade or find yourself in a losing position.
Therefore you should automate your trading and look for a trading system that either already is or can be automated. Automating your trading makes it free of human emotion. The buy and sell operations are all automatic, hands-free, with no manual interventions and you can be sure that you make profits when you should according to your plan.

Principle #8: Have a high percentage of winning trades
Your daytrading strategy should produce more than 50% winners. There”s no doubt that daytrading systems with smaller winning percentages can be profitable, too, but the psychological pressure is enormous. Taking 7 losers out of 10 trades and not doubting the system takes great discipline, and many traders can”t stand the pressure. After the sixth loser they start “improving” the system or stop trading it completely.
Especially for beginners it is a big help to gain confidence in your trading and your system if you have a high winning percentage of more than 65%.

Principle #9: Look for a trading system that is tested on at least 200 trades
The more trades you use in your back testing (without curve-fitting), the higher the probabilities that your day trading system will succeed in the future. Look at the following table:
Number of Trades 50 100 200 300 500 Margin of Error 14% 10% 7% 6% 4%
The more trades you have in your back testing, the smaller the margin of error, and the higher the probability of producing profits in the future.

Principle #10: Chose a valid back testing period
I recently saw the following ad: “Since 1994 I”ve taught thousands of traders worldwide a Simple and Reliable E-Mini trading methodology”.
That”s very interesting, because the e-mini S&P was introduced in September 1997, and the e-mini NASDAQ in June 1999, therefore, none of these contracts existed before 1997. What kind of e-mini trading did this vendor teach from 1994-1997???
The same applies to your back testing: If you developed an e-mini S&P trading strategy, then you should back test it only for the past 3-4 years, because even though the contract has existed since 1997, there was practically nobody trading it (see chart below):
As you can see, it”s rather easy to find a trading system that works. By applying this checklist you will easily identify trading systems that work and those that will never make it.
Author’s name
Markus Heitkoetter
Author”s Info:
Markus Heitkoetter is a 19 year veteran of the markets and the CEO of Rockwell Trading. For more free information and tips and trick how to make consistent profits with online trading, visit his website www.rockwelltrading.com.

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Most people neglect to think of inheritance tax. It can be complicated to understand and unpleasant to learn. But, when the time comes to consider the items you”ll leave behind to your children or loved ones, understanding the issue may quickly become a priority. Inheritance tax is basically a tax…
Most people neglect to think of inheritance tax. It can be complicated to understand and unpleasant to learn. But, when the time comes to consider the items you”ll leave behind to your children or loved ones, understanding the issue may quickly become a priority. Inheritance tax is basically a tax applied by the government to a deceased person”s estate. It is essentially the last opportunity the government has to extract a final tax from a person. That”s why it”s important to understand the .

Thresholds And Tax Estate

Inheritance tax is applied on the balance of an estate over a defined threshold. The threshold is determined by marital filing status and is occasionally adjusted to reflect changes in the economy. For example, married couples have a threshold (at the time of this writing) of ?624,000. If the couple”s estate is cumulatively worth ?1,000,000, the inheritance tax would be applied on the balance between the estate”s valuation and the couple”s threshold (?376,000). Understanding how this works is the first step in planning to minimize the tax on your estate.

Understanding Deductions And Exemptions

There are many types of deductions that can reduce the amount of inheritance tax levied against your estate. For example, gifts valued up to a certain amount (currently ?3,000) may be deducted from your estate”s value each year. Political donations and assets given to a charity that is registered in the UK can also be deducted.

A number of exemptions are also available. The government allows gifts of up to ?5,000 to be given to each of your children as a wedding gift. Similarly, ?2,500 can be given as a wedding gift to each grandchild (?1,000 can be given to anyone else as a wedding gift). These exemptions (there are others) reduce the value of your estate.

Help With Minimising Inheritance Tax

While comprehending the basic concept of inheritance tax is simple, it”s difficult to keep up with adjustments to thresholds and changes in the law regarding deductions and exemptions. Consult with a financial advisor. An experienced advisor can help you build a long-term plan to either minimise the inheritance tax on your estate or eliminate it altogether. Without professional financial guidance, your estate could be vulnerable to one final devastating tax from the government.

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