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“PIMCO, BlackRock to get some satisfaction with Bank of America settlement”

admin — Wed, 29 Jun 2011 21:32:00 +0000

June 29, 2011 – Investment News reports that Bank of America, the nation’s biggest bank, has agreed to pay $8.5B to resolve claims about soured mortgages after mortgage bondholders demanded refunds. Investors, which include Pacific Investment Management Co. and the Federal Reserve Bank of New York, demanded in October of 2010 that Bank of America repurchase home loans that had been packaged into bonds by Countrywide Financial Corp., which BofA acquired in 2008. The settlement covers 530 mortgage trusts with an original loan balance of $242 billion, the bank said.

To read the full article: BofA $85.B settlement

“Raymond James to pony up $300M to buy back ARS”

admin — Wed, 29 Jun 2011 20:08:50 +0000

June 29, 2011 – Bruce Kelly reports for Investment News. “B-D said to agree to settlement with states, SEC over auction-rate securities; also will pay $1.7M fine.” Raymond James had been dealing with the ARS mess since the market for these securities froze in the winter of 2008. Raymond James has been under investigation by regulators regarding ARS sold by its registered reps to clients, who owned about $1.3B in paper at the time. Raymond James registered reps and financial advisers told their customers that ARS were “cash equivalents” and “highly liquid” short term investments that sported a higher yield than money market accounts, according to one official citing the consent order for the dispute.

The firm’s chairman and former chief executive, Tom James, said it was possible that Raymond James could sue an issuer of the securities, Pacific Investment Management Co., LLC, if it failed to buy back the securities from clients. Raymond James has 30 days to extend an offer to repurchase the securities from clients, and the offer must be open for 75 days after that initial bid.

To read the full article: Raymond James $300 ARS buy back

A “Breakthrough” Electric Motor?

admin — Wed, 29 Jun 2011 18:24:01 +0000

June 2, 2011 – A real breakthrough in automobile engine design not dependent on fossil fuels would impact everyone’s lives in a dramatic way. Toyota is leveraging the design of a Serbian-American inventor, Nikola Tesla, to develop it’s “Tesla Roadster.” Ironic that Tesla came up with this “alternating current (AC) induction” motor design in 1888. Some interesting developments: the engine uses no expensive and hard to obtain rare-earth metals; the engine produces 288 horsepower; is three times more efficient than conventional cars in terms of battery-to-wheels ratio; needs only one gear; requires no bulky cooling system; and is no larger than a watermelon. The technical problems seemed to have been solved. One wonders when we’ll actually see a Tesla-based car available to purchase?

To read the full article: http://www.economist.com/node/18750574

“The People vs. Goldman Sachs”

admin — Wed, 29 Jun 2011 18:22:20 +0000

May 26, 2011 – Reading this article written by Matt Taibbi for Rolling Stone, is like Neo choosing to take the “red pill” in the 1999 sci-fi cult movie, “The Matrix.” In the movie, the main character Neo is offered the choice between a red pill and a blue pill with the red pill leading to his “escape” from the Matrix, a fictional computer-generated world, while the blue pill will allow him to remain in the world with no knowledge that anything is wrong. Taibbi is offering readers a “red pill” that could possibly strip the veil from individual investors eyes about how Goldman Sachs, and its brethren operate. The article is written in an raw, outraged tone, with a few expletives strewn throughout at appropriate times. But don’t let any of that put you off. Taibbi has done his research and taken the time to study the moves of Goldman Sachs for more than a decade, and recently the documentation on the Senate subcommittee hearings on the crash of 2008. What he writes will probably disturb you and cause you to re-evaluate whom you can trust in the financial services industry.

To read the full article: The People vs. Goldman Sachs by Taibbi

If this article by Taibbi left you hungry for more, read his earlier article that provides his perspective on how Goldman Sachs has played a major role in six of the major market “bubbles” starting with the Great Depression.

To read this article: The Great American Bubble Machine by Taibbi

“If You Have the Answers, Tell Me”

admin — Wed, 29 Jun 2011 13:00:22 +0000

May 7, 2011 – Economist Gregory Mankaw wrote this article published in the N.Y. Times. Here’s a great, honest quote to start the article: “After more than a quarter-century as a professional economist, I have a confession to make: There is a lot I don’t know about the economy.” Noting that most people don’t run into humble economists, Mankaw declares that economists confidence in their predictions is more often based on bravado than true knowledge. He then goes on to discuss the three questions that perplex him: 1) How long will it take for the economy’s wounds to heal?; 2) How long with inflation expectations remain anchored?; and 3) How long will the bond market trust the United States? He ends with another great, quotable line: “If you find an economist who says he knows the answers, listen carefully, but be skeptical of everything you hear.”

To read the full article: Mankaw NYT article

“Mythical Nirvanas”

admin — Wed, 29 Jun 2011 12:00:18 +0000

March 2011 – In this article by Mitch Anthony for Financial Advisor Magazine, the author makes the case that “people strive for certain lifestyles in retirement, but often find they offer diminishing returns.” He boldly states that there are three mythical nirvanas that people strive for only to later awake to empty, banal and unimaginative realities. The asserts that these three are: 1) “This part of life if going to be about ME; 2) I am going to surround myself with people like me; and 3) I am going to do nothing but relax. He goes further to say that 1) is a formula for emptiness; 2) is a formula for stagnation; and 3) is a formula for boredom. The author presses the point that “the greatest decision retirees make is not how they invest their assets but how they invest their lives.”

To read the complete article: Mythical Nirvanas by Anthony

“Addiction to Prediction”

admin — Tue, 12 Jan 2010 19:19:47 +0000

January 1, 2010 – Financial Planning Magazine – (Abstract) Allan Roth writes shares his key takeaways from reading “The Little Book of Safe Money” by Jason Zweig: 1) People don’t like uncertainty or randomness so they look for experts who can make predictions about the markets; 2) We all are subject to “recency bias” in our ability to look ahead, that current events impact our thinking more than long term events; 3) Asset allocation is alive and well. Although all assets classes suffer in a major downturn, diversification is definitely beneficial during upturns or minor downturns; and finally 4) making decisions about when to get out (during downturns) and in (during upturns) of the market AND being right half the time results in inferior returns compared to practicing basic “buy-and-hold” investing.

To read the full article: https://secure.financial-planning.com/fp_issues/2010_1/addiction-to-prediction-2665136-1.html?pg=1

“Patience, Please, With That Investment Plan”

admin — Mon, 11 Jan 2010 19:22:03 +0000

December 27, 2009 – The New York Times – (Abstract) Those of us who stayed invested in the market and didn’t liquidate their holdings by fleeing into cash captured the most value from the dramatic market rebound in 2009. Senior Editor Paul J. Lim writes how the market advanced from March 9^th, 2009 through December 17 by nearly 65%. His analysis shows that the later you re-entered the market, the more of the rally you missed. For example, if you entered the market a month after the rally began, say April 1, you would’ve missed 40% of your potential gain. If you entered two month after the rally began, you would’ve missed about 60% of the rally’s gain.

One of Lim’s major points is that investors need to stay true to their long term strategy and not get swayed to move in and out of the market during volatile years.

To read the full article: http://www.cnbc.com/id/34600443