7/3: 

14 companies that have sustained an A.M. Best Financial Strength Rating of “A” or higher from as early as 1907. These companies are:

* Federal Insurance Co. (a member of the Chubb Group of Insurance Cos.)

* The Life Insurance Company of Virginia (now known as Genworth Life and Annuity Insurance Co.)

* Great American Insurance Co.

* Hartford Fire Insurance Co.

* John Hancock Life Insurance Co.

* MetLife

* National Fire Insurance Company of Hartford (part of CNA Insurance Cos.)

* New York Life Insurance Co.

* Northwestern Mutual Life Insurance Co.

* Penn Mutual Life Insurance Co.

* Providence Mutual Fire Insurance Co.

* Prudential Insurance Company of America

* Standard Insurance Co.

* Western & Southern Life Insurance Co.

7/3: Asian stagflation- Inflation is accelerating in Asia, raising the likelihood that central banks will have to increase interest rates in spite of rising fears of slowing growth

7/3: IMF warns of threat to poorer nations
Jul 01 2008 22:30
The rise in food and oil prices could 'severely weaken' the economies of up to 75 developing countries, including Pakistan and Indonesia,

7/3: Still won't work that well: Florida Gov. Charlie Christ has signed a new law increasing penalties on annuity salespeople who pressure elderly clients to buy annuities that the clients do not need or do not want.

The new law, S.B. 2082, increases maximum fines to as much as $250,000, from $100,000, for “unfair or deceptive” annuity sales activities, including the practices known as “twisting” and “churning.”

As defined by Florida officials, twisting refers to an agent intentionally making misleading statements or significant omissions about annuities or insurance policies to persuade a consumer to sell a current annuity and buy a new annuity from another insurer.

The reason why the overview is troubling is that no one bothers to teach the mandatory material to begin with. So what does one expect???????

7/2: FOR VETERANS- A&A Special Pension page. Offered by the U.S. Department of Veterans Affairs (the VA), the A&A Special Pension is paid in addition to other VA pension benefits. It can help pay for care in the home, in an assisted living facility, or in a nursing home. It is not dependent upon service-related injuries

7/2: 12 tips to help you find money (and free resources) for care at home (and an assisted living facility or a nursing home).

7/2: ElderCarelink to help you find the right local eldercare services for your loved one. ElderCarelink has established a nationwide network of carefully screened eldercare providers and facilities. We are pleased to bring this referral service to you free of charge.

Within minutes of completing a brief Needs Survey, you will receive a detailed email report that list eldercare providers in your area who match your specific requirements. Last year alone, over 100,000 families utilized this service in their search for high-quality senior care.

7/2: Hospitals discharge their Medicare patients quicker and sicker that ever before. In 1968, patients age 65 and older stayed in the hospital an average of 14.2 days. By 1982, that was down to 10.1 days. Now it only 6.4 days.

7/2: The federal Pension Benefit Guaranty Corp. guarantees benefits, but currently up to only $4,312 a month.

7/2: Investment Distributions Calculator

7/2: Retirement According to an analysis by T. Rowe Price, you have nearly a 30% chance of depleting a $300,000 lump sum by age 85, assuming you invest in a diversified stock and bond portfolio and withdraw $2,000 a month. Live to 90 and the likelihood hits 57%.

7/2:

Strange, but True:
Unusual Strategies for Claiming Social Security Benefits"

Three claiming strategies have recently received a lot of press attention:

• "Borrow and Invest" - an individual can claim benefits and then reclaim at a later date, paying back the money received (without interest) during the interim.
  
  
• "Claim Now, Claim More Later" - a married individual can claim a spousal benefit, and then switch to her own retired worker benefit later.
  
  
• "Claim and Suspend" - an individual may claim his benefit and then suspend payment, allowing his spouse to claim a spousal benefit.

These strategies were generally designed to encourage work, but are likely to benefit mainly those with substantial resources.

7/1: Bad (WSJ) Just 32% of money managers believe U.S. stocks are undervalued, down from 42% three months ago, according to the latest quarterly Investment Manager Outlook survey by Russell Investments. Managers believe a slowing economy, inflation, shaky credit markets and energy costs are the top factors that could drag down stock returns in the second half of this year

7/1: Gas deduction: Due to rising gas prices, the mileage rate will increase by eight cents to 58.5 cents a mile for all business miles driven from July 1 through Dec. 31, 2008. The new rate for computing deductible medical or moving expenses will also increase by eight cents to 27 cents a mile. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.

7/1: Nothing like charity:  The president of the United Way, in Charlotte, N.C., received an increase of more than $700,000 in retirement benefits for the 2007 fiscal year, reports The Charlotte Observer. The annual compensation for the president, Gloria Pace King, is now more than $1.2-million, with her benefits package rising from $108,590 to $822,507.

7/1: Europe inflation is twice what is wanted. It's 4%.

6/30: Buffet on Risk- A couple of comments. Beta is NOT risk. Long Term Capital reps said that you could not have a 6 sigma occurrence. But what has 9/11? That was a billion to one occurrence and it happened.


So there is the reason why buy and hold does not have to work. Stuff happens. That said, every reader knew the implications of a fat sigma in 1999 and just a couple years ago. It's call the inverted yield curve. 
You did know that didn't you? Admittedly, the curve does not tell you how bad, for how long, nor exactly when it will start. But embedded is the knowledge that you are in for some bad times.

6/29: PR Release- So The California CPA Society and the AICPA promote knowledge and ethics?
You will need to read this PR Release first in order to make sense of this commentary "PBS fluff, CPA crap, Financial Literacy 0" May 5th.

John Larkin replied that the Society stands by its presentation (expected) and goes on to say that the CPAs are taught risk (no) and that they are required to adhere to the highest ethics. This is a reply. You may have to do some homework, but there is not a single CPA in California, PFS in particular, who is either legal or ethical in offering comprehensivefee planning advice.

"June 14, 2008

Mr. John Larkin
Director of Communications
California Society of Certified Public Accountants
1235 Radio St
Redwood City, CA 94065

Dear Mr Larkin,

I understand the necessity of your reply but disagree once again with the effort. The Damon segment was, in fact, presented to a group of 500 without the appropriate disclaimers. When attendees were asking me what was going on, there is a problem with the entire investing message that was presented. And, I repeat, you do not let those with nil knowledge of investing stand in front of this audience and provide commentary on how to engage the young (or the old or just about anybody) in proper investing habits.  That said, I could not expect much simply because a statement you made was categorically without merit. “The volunteers are all licensed CPAs who understand well the risks of investing” is both disingenuous and false.

First, the risks of diversification are not taught to CPAs PFS, CFPs et al. I know the material for all entities- the only ones currently being taught such basics are CFAs.  But the part this is most disrespectful  is your comment that CPAs adhere to the highest ethical standards. There is not now nor has ever been a CPA PFS who is either fully licensed nor LEGAL in California to offer comprehensive fee planning services. The violation of trust- and law- was made clear to the California CPA Society as well as the AICPA over a decade ago and, to date, not one CPA PFS has ever bothered to make an effort to conform to state laws. And I bet you are clueless to the requirements. No surprise- the California CPA Society has done its best to hide the law.

No matter, if you want to preach trust, knowledge, ethics and responsibility, it is not a good idea to do so when your organization and effectively every CPA offering fee personal financial advice has violated their fiduciary duty to clients.

You need to do a lot more homework before you offer such comments to me."

Journalists must start recognizing that the reasons for so many scams and losses of money emanates from a severe lack of knowledge due to a severe lack of training on the fundamentals of investing. Diversification, taught correctly, would have almost completely eliminated the huge employee losses at Enron and Worldcom. From a Morningstar Journalist about my Fundamentals of Investing Instruction- "You could have saved Enron employees nearly $1 billion!"

That said, the SEC, FINRA, NASAA, AARP, CPA Society, CFP Board, et al are doing effectively nothing to help consumers since they refuse to train the "professionals". We are in some very bad times and it is not going to get much better when the organizations we rely on are asleep at the wheel.

6/29: Same headline- different results Fed sits tight as ECB chief signals rate rise
Jun 26 2008 00:42
The Federal Reserve indicated growing fears about inflation relative to growth on Wednesday, but stopped short of saying that it saw inflation as the dominant risk

Overview: Equities rally as Fed holds rates
Jun 25 2008 21:52
There was volatile trading in US Treasury bonds, equities and the dollar after the Federal Reserve expressed concern about inflation and kept investors guessing about rate rises later this year.

Strong gains for S&P as Fed holds rates
Jun 25 2008 21:47
US stocks rose at the strongest pace in two weeks as a rally in financials and falling oil prices cheered investors while the Federal Reserve did nothing to spook markets, keeping interest rates on hold in a widely expected decision

Dollar suffers selling as Fed holds rates
Jun 25 2008 22:12
The dollar suffered a bout of selling late in New York on Wednesday after the US Federal Reserve kept interest rates on hold after its policy meeting

6/26: Continuing Care Accreditation Commission
Offers state specific listings of accredited CCRCs and other useful information.
Continuing Care Retirement Community: By definition (AARP), “a CCRC are sometimes called life care communities. Entering one is usually a once-in-a-lifetime choice and that's the appeal. Many have large campuses that include separate housing for those who live very independently, assisted living facilities that offer more support, and nursing homes for those needing skilled nursing care. With all on the same grounds, people who are relatively active, as well as those who have serious physical and mental disabilities, all live nearby. Residents then move from one housing choice to another as their needs change.”


6/26: Risk management: (NY Times, Bernstein) The debacle from which the system is now trying to emerge suggests that prevailing risk-management strategies were managing the wrong risks. Surely, a reversal in home prices was a risk to be reckoned with, but it appears to have played no role, or at least none that mattered.
How will we deal with surprises — outcomes different from what we expect? What are the consequences of being wrong in our expectations? This is the point when risk management begins to live up to its real meaning. Risk means the chance of being wrong — not always in an adverse direction, but always in a direction different from what we expected.
RISK management, then, should be a process of dealing with the consequences of being wrong. Sometimes, these consequences are minimal — encountering rain after leaving home without an umbrella, for example. But betting the ranch on the assumption that home prices can only go up should tell you the consequences would be much more than minimal if home prices started to fall.

In this assumption, the word “only” is ridiculous. There are no “onlys” in the future. More things can happen than will happen.

Under those conditions, risk management should concentrate either on limiting the size of the bet or on finding ways to hedge the bet so you are not wiped out if you take the wrong side — if home prices do start to go down, or even stop rising. Risk management is fundamentally different from managing volatility, which is how many investors view it. Volatility is often a symptom of risk but is not a risk in and of itself. Volatility obscures the future but does not necessarily determine the future.

Effective risk management starts with the recognition that any forecast can be wrong, then weighs the consequences of being wrong. Only then can we decide whether to make a bet, whether to hedge that bet and how to execute the hedge if needed.

6/26: Fat, fat, fat: Diabets has increaed by 2,000,000 in the last two years. 58% of this is avoidable by diet and exercise.

Won't happen. The whopper, big mac, (super sized, of course) et al will prevail. 

6/26: THE INFORMED PATIENT, By Laura Landro
Medical-ethics teams are increasingly the arbiters of agonizing health decisions. But as the number of hospitals with consulting services has grown, so have questions about how qualified some of these professionals are to render life-and-death advice. 


6/25: 15.3% drop in home prices the last year.  the price gains of teh last 4 years ahve been erased.

6/25: An Earnings Comeback Deferred (Barrons) As analysts revise earnings estimates downward, a much-anticipated corporate rebound isn't likely to take place until next year.
And I frankly don't think you will see a true turnaround in real estate for two years. If you need to sell a home, just suck it up.

6/25: I know many of you will be elated that I got a 4# largemouth on a buzzbait last night.

6/24:

Date:	2008-06-12
By:	Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University) Daruvala, Dinky (Department of Economics, Karlstad University) Jaldell, Henrik (Department of Economics, Karlstad University)
URL:
We design a donations vs. own money choice experiment comparing three different treatments. In two of the treatments the pay-offs are hypothetical. In the first of these, a short cheap talk script was used, and subjects were required to state their own preferences in this scenario. In the second, subjects were asked to state how they believed an average student would respond to the choices. In the third treatment the pay-offs were real, allowing us to use the results to compare the validity of the two hypothetical treatments. We find a strong hypothetical bias in both hypothetical treatments where the marginal willingness to pay for donations are higher when subjects state their own preferences but lower when subjects state what they believe are other students preferences. The explanation is probably a self-image effect in both cases. We find that it is mainly women who are prone to hypothetical bias in this study.<

6/24: Securities arbitration: From 2004-2007 Securities Arbitration Group founder Paul Young conducted a study of 400 adults he and his team interviewed in Las Vegas casinos. The criteria was that the subject is both a regular Las Vegas game player and gambler and, as well, that the person is a Wall Street investor.

“The group was evenly split between males and females, marital status was not an issue, and the age group was between 40-54. Self-stated income ranged from $50,000 to $750,000 annually. Survey participants must have been U.S. citizens. Further, the subjects must have been employed persons or, if married, one of the partners must have been gainfully employed or self-employed.

The findings: 77% stated that Wall Street investing carries with it a “significantly” higher degree of risk than Las Vegas gambling.

Of those 77% who don’t trust Wall Street, when asked the reason many cited the Enron debacle, the Internet/tech boomlet, and more.”

More: Have you been burned by your stockbroker or Wall Street brokerage, 34% said that they had. NO ONE of these 34% said that the did anything about it; had not heard of securities arbitration.”


6/24: New Study Says Generic Drugs Now Own 63% of Medicare Part D Market - Up from 50% Less Than Three Years Ago

6/24: EU businesses fear interest rate rise
Jun 22 2008 23:30
European companies are worried about the prospect of higher interest rates in the eurozone, saying the move could choke growth and strengthen the single currency further against the dollar

6/24:

Date:	2008-05-23
By:	Lovric, M. Kaymak, U. Spronk, J. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
URL:
Based on a survey of behavioral finance literature, this paper presents a descriptive model of individual investor behavior in which investment decisions are seen as an iterative process of interactions between the investor and the investment environment. This investment process is influenced by a number of interdependent variables and driven by dual mental systems, the interplay of which contributes to boundedly rational behavior where investors use various heuristics and may exhibit behavioral biases. In the modeling tradition of cognitive science and intelligent systems, the investor is seen as a learning, adapting, and evolving entity that perceives the environment, processes information, acts upon it, and updates his or her internal states. This conceptual model can be used to build stylized representations of (classes of) individual investors, and further studied using the paradigm of agent-based artificial financial markets. By allowing us to implement individual investor behavior, to choose various market mechanisms, and to analyze the obtained asset prices, agent-based models can bridge the gap between the micro level of individual investor behavior and the macro level of aggregate market phenomena. It has been recognized, yet not fully explored, that these models could be used as a tool to generate or test various behavioral hypothesis

6/24: Aging Percentage of population over age 60         Year 2000                                                                                                                                                       2020

India 7.6%	11
China 10.3	16.7
USA 16	22.8
France 20.5	26.8
UK  20.6	26.7
Italy  22.3	33
Japan 23.2	33.7

6/23: Obesity: Nearly two-thirds of American adults are overweight or obese, according to the Centers for Disease Control and Prevention, and the percentage of adults classified as obese doubled from 1980 to 2000 to 31 percent of the population.
6/22: Front end loads. About 15% of B/D mutual funds were sold with front end loads more than 4% in 2006

6/22: Global fornication: The world's population will reach 7 billion by 2012. There are 6.7 billion today. There were 6 billion in 1999- meaning it has taken only 13 years to add an extra billion. The world population did not reach 1 billion until 1800 (Tuesday). About 1.5%  are 80 years or older. It will be about 5% by 2050. It will be about 10% for the developed countries.

Think about this for those born today. they are apt to see twice the number of people on this earth before they die. That said, the earth cannot sustain that many if only because the haves will never let the have nots get theirs. No matter, there should be a nice plague around 2020 that will change everything. Not a problem for me- I 'll be too old then to care.  Maybe it will be a nice plague carried by butterflies instead of those nasty rats. Killed by a butterfly has a nice ring to it.

6/22: Current PR Release: Dumb Honest

In the trade, it means that the agent may mean “well” but is so stupid they don’t know what they were doing. That may be “valid” for someone that is brand new and getting nil assistance to do what is right (the norm with most B/D firms) but it is an unacceptable rationale from any broker/planner/insurance agent or small furry animal with more than two years of experience.

Here is how FINRA is a conspirator to the dumb part

They are offering a course on ethics

1. Discuss the relationships between the ethical and legal or regulator issues
2. Recognize the unique conflicts of interest in the securities industry
3. Apply techniques to increase employee sensitivity and awareness of ethical issues.
4. Understand the impact of reward system influences on ethical conduct
5. Promote ethical behavior and a culture of compliance through management and leadership
6. Leverage prescriptive decision making tools to resolve ethical issues
7. Identify the human limitations that interfere with ethical decision making
8. Discuss enforcement actions, disciplinary activity and punishments for illegal and unethical conduct.

I taught ethics classes for years> situational ethics, moral egoism, veil of ignorance etc. But here is the key- if you do not know what you are doing at all levels, primarily due to the refusal to comply with the fundamental knowledge of how to invest- there is little sense in trying to apply ethical standards. It’s a lot of “nice” words with no concrete demand for competency.

The similarity is this. You can demand ethical standards of a hospital janitor in doing operations. But it is illogical (the height of folly) to even consider the use of one to do such work in the first place.

Brokers, B/D firms, CFP, PFS, SEC. NASSA, FINRA et al do not know and have never addressed the fundamentals of investing to anyone in the industry. Hence the application of ethics to an industry that has never known risk is generally a waste of hot air save but for the absolute worst of the industry charlatans.

Repeated ad nauseam, if you do not know diversification (not taught), you cannot develop risk. If you do not know risk, you cannot determine suitability.

6/22:  Medicare Fraud- the GAO  aid that doctors, nursing homes hospitals and hospice paid by Medicare have  failed to pay $2 billion in federal taxes in 2006

6/22: "The Retirement-Consumption Puzzle: Actual Spending Change in Panel Data" 

6/22: Par for the course-

Banks reported nearly 53,000 cases of suspected mortgage fraud last year, up from more than 37,000 a year earlier and about 10 times the level of reports in 2001 and 2002, according to the Treasury Department's Financial Crimes Enforcement Network.

The most common type of mortgage fraud was misstatement of income or assets, followed by forged documents, inflated appraisals and misrepresentation of a buyer's intent to occupy a property as a primary residence.

6/22: 401(k) contributions drop in troubled economy
Some 21% of participants are now contributing at a lower rate and 4% have stopped altogether, according to Putnam.

6/22: Life expectancy: Overall U.S. life expectancy at birth rose to 78.1 years in 2006, up 0.3 years from the 2005 average,

Age-adjusted death rates associated with 11 of the 15 leading causes of death dropped significantly between 2005 and 20006, researchers say.

CDC researchers say life expectancy for men ages 60 to 70 increased by about 0.23 years, and that life expectancy increased 0.1 years for men ages 70 to 100.

Life expectancy increased 0.27 years for women ages 60 to 70, and 0.18 years for women in the 70-100 age group.

Traditionally, women older than 65 have been twice as likely as older men to need nursing home care.

Life expectancy at birth hit a new record high in 2006 of 78.1 years, a 0.3 increase from 2005. Record high life expectancy was recorded for both white males and black males (76 years and 70 years, respectively) as well as for white females and black females (81 years and 76.9 years).

The preliminary number of deaths in the United States in 2006 was 2,425,900, a 22,117 decrease from the 2005 total. With a rapidly growing older population, declines in the number of deaths (as opposed to death rates) are unusual, and the 2006 decline is likely the result of more mild influenza mortality in 2006 compared with 2005.

Between 2005 and 2006, the largest decline in age-adjusted death rates occurred for influenza and pneumonia, with a 12.8 percent decline. Other declines were observed for chronic lower respiratory diseases (6.5 percent), stroke (6.4 percent), heart disease (5.5 percent), diabetes (5.3 percent), hypertension (5 percent), chronic liver disease and cirrhosis (3.3 percent), suicide (2.8 percent), septicemia or blood poisoning (2.7 percent), cancer (1.6 percent) and accidents (1.5 percent).

There were an estimated 12,045 deaths from HIV/AIDS in 2006, and age-adjusted death rates from the disease declined 4.8% from 2005.

The preliminary infant mortality rate for 2006 was 6.7 infant deaths per 1,000 live births, a 2.3 percent decline from the 2005 rate of 6.9.

Alzheimer’s disease passed diabetes to become the sixth leading cause of death in the United States in 2006. An estimated 72,914 Americans died of Alzheimer’s disease in 2006. However, the preliminary age-adjusted death rate from Alzheimer’s did not change significantly between 2005 and 2006.

6/22: ESTATE AND TRUSTS LINK: Decent primer

But here is the drawback to most sites and commentary. they will talk about inheritance tax for large estate. They will talk about life insurance trusts. Same as the texts I had for my major in estate planning. But then nothing on what type of insurance to use, where to get it, why and so on. The reason is that the writers, attorneys, CPAs et al know nothing about insurance. But neither do CFPs or insurance agents. If you need something like an ILIT, do some homework. Read the article above on Irrevocable Trusts. Do not trust your brother in law to sell a policy that will never work as intended. 


6/22:"The Timing of Redistribution" 
6/19: Veterinary Pet Insurance (VPI), the nation's oldest and largest provider of pet health insurance, recently analyzed its medical claims received in 2007 to determine the top 10 most commonly claimed conditions for dogs and cats. For both canines and felines, the top 10 conditions accounted for about 25 percent of all medical claims received last year.

Canine                                       Feline

1. Ear Infections                        1. Urinary Tract Infections

2. Skin Allergies                        2. Gastritis/Vomiting

3. Pyoderma/Hot Spots              3. Chronic Renal Failure

4. Gastritis/Vomiting                   4. Enteritis/Diarrhea

5. Enteritis/Diarrhea                   5. Diabetes Mellitus

6. Urinary Tract Infections         6. Skin Allergies

7. Benign Skin Tumors              7. Colitis/Constipation

8. Eye Inflammation                 8. Ear Infections

9. Osteoarthritis                       9. Respiratory Infections

10. Hypothyroidism                 10. Hyperthyroidism

Nothing on Wildebeast however

6/19:Hemroid Treatment
This site is mandatory for the upcoming election becuase the politicians will have us all bending over.

6/19: Acne Treatment . 

6/19:

Date:	2008-06
By:	Nicole M. Boyson Christof W. Stahel Rene M. Stulz
URL:
Using hedge fund indices representing eight different styles, we find strong evidence of contagion within the hedge fund sector: controlling for a number of risk factors, the average probability that a hedge fund style index has extreme poor performance (lower 10% tail) increases from 2% to 21% as the number of other hedge fund style indices with extreme poor performance increases from zero to seven. We investigate how changes in funding and asset liquidity intensify this contagion, and find that the likelihood of contagion is high when prime brokerage firms have poor performance (which would be expected to affect hedge fund funding liquidity adversely) and when stock market liquidity (a proxy for asset liquidity) is low. Finally, we examine whether extreme poor performance in the stock, bond, and currency markets is more likely when contagion in the hedge fund sector is high. We find no evidence that contagion in the hedge fund sector is associated with extreme poor performance in the stock and bond markets, but find significant evidence that performance in the currency market is worse when hedge fund contagion is high, consistent with the effects of an unwinding of carry trades.

6/19:

6/18:

6/17:  Charities

6/17: This is the most visual reason why Obama may not/ can not choose Hillary as VP

6/17: This is not going to get better for some time: U.S. home foreclosure filings in May increased from April and were a whopping 48 percent higher than a year earlier. 

Home foreclosure filings in May totaled 261,255, up 7 percent from April.

"The nationwide rate of increase for default notices and foreclosure auction notices slowed in May, with default notices up just 1 percent from the previous month and auction notices down 3 percent from the previous month," .

"However, bank repossessions continued to surge in May -- posting a double-digit percentage increase from the previous month and more than twice the number reported in May 2007 -- which pushed the total inventory of bank-owned REOs in our database to more than 700,000,

* “Elevated commodity prices, especially of oil and food, pose a serious challenge to stable growth worldwide, have serious implications for the most vulnerable, and may increase global inflationary pressure.”

G8

6/17:  They knew the risk: (FT) Investors who backed US financial companies' drive to raise much-needed capital are sitting on nearly $10bn in paper losses amid a continued slump in the sector's shares

The negative returns suffered by investors are likely to make it more difficult and expensive for US financial groups to tap equity markets if, as expected, the credit crunch forces them to raise more capital.

Investors who bought the $65bn-plus in common and convertible shares issued by large US financial institutions since last October have seen their total investments fall by more than $9.7bn – a negative return of about 15 per cent – according to an FT analysis of Dealogic data.

Those who took part in the $1.2bn recapitalisation of the bond insurer Ambac last March are nursing paper losses of more than 70 per cent. And fund managers who backed a $1.2bn capital raising by fellow monoline insurer MBIA have seen their investment shrink by 60 per cent.

Shareholders in Citigroup who thought that the sharp fall in the stock made last month’s $4bn share issuance a buying opportunity face a 24 per cent loss.

Of the 20-plus fund raisings by US banks and insurers since the onset of the crisis, only two – by the student loan provider Sallie Mae and the regional lender Sovereign Bancorp – show a small positive return.

6/17:

Date:	2008-05-15
By:	Maroš Servátka (University of Canterbury) Steven Tucker (University of Canterbury) Radovan Vadovic
URL:
While most of the previous literature interprets trust as an action, we adopt a view that trust is represented by a belief that the other party will return a fair share. The agent’s action is then a commitment device that signals this belief. In this paper we propose and test a conjecture that economic agents use trust strategically. That is, the agents have incentives to inflate the perceived level of trust (the signal) in order to induce a more favorable outcome for themselves. In the experiment we study the behavior of subjects in a modified investment game which is played sequentially and simultaneously. While the sequential treatment allows for strategic use of trust, in the simultaneous treatment the first mover’s action is not observed and hence does not signal her belief. In line with our prediction we find that first movers send significantly more in the sequential treatment than in simultaneous. Moreover, second movers reward trusting action, but only if it is maximal. We also find that signaling with trust enhances welfare.

6/16: It's just money:

Between early 2004 and mid-2007, a period of unprecedented wealth on Wall Street, seven of the nation’s largest financial companies earned a combined $254 billion in profits.

But since last July, those same banks — Bank of America, Citigroup, JPMorgan Chase, Lehman Brothers, Merrill Lynch, Goldman Sachs and Morgan Stanley — have written down the value of the assets they hold by $107.2 billion, gutting their earnings and share prices. Worldwide, the reckoning totals $380 billion, much of which reflects a plunge in the value of tricky mortgage investments.

The more that banks take write-downs, the more they are, in a sense, shredding through the record profits they made when times were good. Citigroup, for example, has written down its mortgage and other loan investments by $37.3 billion or a full half of the handsome profits the global giant pulled in during the boom years.

Merrill Lynch, much smaller in size, has taken write-downs of $32.6 billion — or a whopping 153 percent of its profits from 2004 through last summer. Even if Merrill is given credit for the money it earned in the past year, the bank still had write-downs that translated into losses of $14 billion, and that is two-thirds of its profits in those three and a half years that ended with a pop last July.

6/16: Reverse mortgages: 

For a 70-year-old homeowner in New York with a house worth $500,000, World Alliance may loan as much as $240,000, with $17,000 in fees, including mortgage insurance. The interest rate for the loan is tied to the monthly London Interbank Offered Rate, or Libor, plus a margin and starts at 4 percent as of June 5. The rate may go as high as 13.5 percent during the life of the loan, if interest rates rise substantially.

6/16: Medicare Approved Facilities/Approved Trials

Bariatric Surgery
     Posted new facilities
http://www.cms.hhs.gov/MedicareApprovedFacilitie/BSF/list.asp#TopOfPage

Carotid Artery Stenting Facilities
     Posted new facilities
http://www.cms.hhs.gov/MedicareApprovedFacilitie/CASF/list.asp#TopOfPage

6/15: Inflation???? European bourses fell for their seventh day in eight as inflations worries as fears deepened that inflation fears will force central banks to hike rates

6/15: World Elder Abuse Awareness Day 2008 --- June 15, 2008

By 2030, nearly one in five persons in the United States (approximately 72 million persons) will be aged >65 years (1). As the number of older adults grows, so does the number of persons who might experience elder abuse or neglect, and associated injuries, social isolation, diminished well being, and increased risks for suicide and premature death.

6/15: Ah yes, inflation: On a seasonally adjusted basis the Consumer Price Index for All Urban Consumers (CPI-U) rose 0.6 percent in May after increasing 0.2 percent in April.
Admittedly it is mostly gas prices. Some say there is a gas bubble. Bite me. We are going to be dealing with high gas prices for the rest of our lifetimes unless and unitl they come up with an alternative source of power. It is possible- but I will be dead by then. . 

6/15: And another one:

John Hancock Financial Services says it has filed requests for rate increases for some of the long term care insurance policies it has originated. 

the rate increases would average 14%. Rates on policies Hancock sold in the 1990s would increase 13%, and rates on the Fortis policies would increase 18%.

Hancock says it cannot make an adequate profit on the policies at existing rates because of low policy lapse rates.

The AALTCI recently found when it studied LTC insurance persistency that the product has an average first-year lapse rate of just 7.8%, and a second-year lapse rate of just 4.9%. By the end of 10 years, about 69% of consumers who bought an LTC insurance policy still have their coverage.

In contrast, only 46% of the purchasers of disability insurance policies would have their policies at the end of 10 years, and only 42% of the purchasers of individual life insurance policies would have their policies.

Genworth Financial Inc., Richmond, Va., cited low lapse rates in July 2007 when it filed for rate increases ranging from 8% to 12% on older LTC policies in all 50 states and the District of Columbia.

6/15: The cost of long-term care insurance nearly doubles for a person now 55 years old compared to a 65-year-old buying the same coverage, according to the newly-released 2008 Long-Term Care Insurance Price Index.
    As the mass of baby boomers reaches retirement age and people in general are living longer, long-term care insurance is poised to play a greater role in financial planning. That said, the “natural tendency of consumers, especially in difficult economic times, (is) to put off planning for long-term care,” says Jesse Slome, executive director of the American Association for Long-Term Care Insurance, which prepared the price comparisons.
    Rates in 2008 are up 4% over last year and are anticipated to increase each year going forward, but the cost also increases depending upon the age of the consumer. A 55-year-old married person purchasing $100-per-day benefit for a maximum of three years would pay an average of $709 a year and a single person would pay $1,095, which includes in-home care. The same policy for a 65-year-old is $1,342 annually for a married individual and $1,999 for a single person. Similar differences are found for policies providing additional benefits.
    Another study done by the AALTCI––this one of companies that wrote 250,000 individual long-term care insurance policies in 2007––found that 51.5% of applicants in their 50s qualify for preferred health discounts versus 42.2% who waited until their 60s. While long-term care is generally used by people in the later stages of life, the association’s data found that 12.5% of new claims filed in 2007 involved people younger than 70 years old


6/15: Longevity: Age-adjusted death rates in the United States declined significantly between 2005 and 2006 and life expectancy hit another record high, according to preliminary death statistics released by CDC's National Center for Health Statistics. The 2006 age-adjusted death rate fell to 776.4 deaths per 100,000 population from 799 deaths per 100,000 in 2005. Life expectancy at birth hit a new record high in 2006 of 78.1 years, a 0.3% increase from 2005, and record high life expectancy was recorded for both white males and black males (76 years and 70 years, respectively) as well as for white females and black females (81 years and 76.9 years).

6/13: So late to the game it is pathetic:  (Financial Industry Regulatory Authority) 

“I believe there is a place in the market for these products, to help address the longevity risk that new retirees will increasingly face,” said Susan Merrill, chief of enforcement . “But I am here to send a very clear message: FINRA is watching very closely how variable annuities are being sold to the public—and for good reasons.”

EFM- My god- these have been aournd since the 80's and here it is, twenty years later, where they are now concerned. 

A chicago bank was fined $225,000 by FINRA for making unsuitable sales of deferred variable annuities to 23 customers.

Most of the customers were over 70, and most exchanged fixed annuities that paid a minimum rate of 3% and were past the surrender period for variable annuities with fixed options that paid a maximum rate of 3% and had 6-year surrender periods, Merrill said.

“When firms are recommending annuities to any customer, they must act in the customers’ best interests, taking into account all relevant factors -- including the customers’ ages and liquidity needs, surrender charges, product expenses and investment features,” Merrill said.

Merrill suggested that product complexity can add to the difficulty of explaining a product to purchasers.

“I've looked at the riders in the cases we’ve investigated,” Merrill said. “Frankly, I found it confusing to deal with all the possible bells and whistles, and it was particularly difficult to find clear written disclosure of the costs and benefits of each rider. What’s more, when we asked brokers to explain them, some could not.”

EFM- Actually, it is pretty difficult to explain- if you are stupid. The essence can be deloveped quite directly. But to do so would slow/stop sales and, heaven forbid, we can't have that happen can we????


6/13: Fee Only (Rick Ferri) I will add my personal dissatisfaction about the sales antics of a large and growing number of advisors who claim to be "financial planners" but who's real business is to use financial planning as a hook to bring in investment management business.

Investment management is NOT financial planning. If you are looking for a person who does financial planning, go to one of the sites that Warren mentioned above and find a likable, well rounded financial planner in your community. Financial planners will help you sort out all your financial needs and make suggestions for improving them.

Managing money is a completely separate business from financial planning and should be treated as one. After you see a financial planner and pay them by the hour or project for planning, then either manage the portfolio yourself or seek a low-cost investment manager to do it for you. You may decide to pay the planner a set annual fee for OVERSIGHT of the investment manager to ensure the portfolio is moving in the right direction.

Unfortunately, if you find a financial planner that really just wants to manage your money, you will not receive OBJECTIVE ADVICE about alternatives for low-cost investment management. Instead, they will give you two options. One, you can hire them; Two, good luck managing the money yourself.

There are many members of NAPFA who claim to be in the financial planning business but are really seeking assets to manager. As CFPs, they are supposed to follow a strict Code of Ethic to ensure objectivity and eliminate any conflict of interest. But that Code comes to a screeching halt when the question come up of who is best to manage your money. Even if it is clear that the planner is not the best solution, do NOT expect the planner to tell you where to shop.

My advice is to decide what services you are seeking, and who is best to deliver that service. If you are seeking financial planning, go to a financial planner. If you are seeking investment management, go to an investment manager.


6/13: Payday lenders=  15 million people every month

6/13: The odds- one out of every 240 people will file a claim on their automobile insurance, while one out of every three people will use their long-term care insurance policy.

6/13: Credit cards: Between 1989 and 2001, credit-card debt nearly tripled, soaring from $238 billion to $692 billion. By last year, it was up to $937 billion,.

6/13: The lottery: A household with income under $13,000 spends, on average, $645 a year on lottery tickets, about 9 percent of all income.

6/12: Fat bills:

And extremely obese young adults — 70 or more pounds overweight — will incur $15,000 to $29,000 more in lifetime medical expenditures than their healthy-weight peers

6/11: Stagflation: 

When  asked if we were headed toward an era of 1970’s-style stagflation, Greenspan agreed that “there is a risk,” since after a long period of lower inflation and long-term interest rates “we’re now heading in the opposite direction,” and concluded that “unless we handle this is a thoughtful way—and this is a political issue—there is a risk of stagflation.” Looking out 24 months, Greenspan said that “excluding oil and most food, we’ll probably have higher inflation,” but argued that “it’s much too soon to say” that the U.S. has dodged a recession, though he expects, however, that “looking back, I think we’ll say it was a mild” one.

6/11: SOCIAL SECURITY DISABILITY FAQ LINK

6/11: Inflation: Ben Bernanke believes that the danger of a “substantial downturn” in the US economy has abated over the past month, but that inflation risks are increasing. Mr Bernanke’s comments are likely to be interpreted by economists as a signal that the Fed is prepared to raise its main interest rate above the current 2 per cent level later this year, if necessary.

I am not accepting that we are over the economic hump by any means.  

6/10: Variable annuity suitability: (Hartford Life)  Who really should own suitability? On the one hand, [should] it really be distributors who have front-line responsibility or direct-line contact, who have the opportunity to really capture the essence of what the rules are trying to deal with?"
"Or is it the [responsibility of the] insurers, the backroom processors, to check everything?"