News

Cell Phone Bills Too High for Budget

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The Wall Street Journal recently published an article about how cellphones are eating the family budget. It seems as though the idea and everything but the words were lifted from an earlier article in the Boston Globe. Whatever the source, this is something that I saw coming years ago as a financial planner, and now, it seems things are maybe worse than ever when it comes to your budget and your cell phone. Your Cell Phones, Your Budget When I was a Certified Financial Planner advising clients, one of the first steps (after signing them up as clients) was to review their budget. For the wealthy, a budget isn’t really all that useful or eye-opening, but for everyone else, a budget can reveal some very ugly truths. First, most people spend way more money each month on things than they think they do. Nothing is a bigger shocker than filling out a budget that includes everything you THINK you spend money on each month, and then sitting down with someone and matching that up to your bank and credit card statements to see what you ACTUALLY spend each month. Second, for most people, there actually isn’t much they can do …

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What Is Wrong With Greece Debt?

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There has been a lot of news over the last year about the situation in Greece and how Greece’s economy could possibly take down the Euro. The ripples from such an event could set off a global slow down. But, what is the problem with Greece’s economy, and why has this never been an issue before? Greece and the Euro To understand what is going on with the Euro and Greece, it is helpful to understand just where things stand today, and where they stood a couple of decades ago. Before the implementation of the Euro as a single currency for countries across Europe, each country had its own money. Greece had its own currency called the drachma, and other countries had their own currency such as the German mark, the French frank, and so on. Each country gave up its own currency to make one currency to be used through out Western Europe, with the notable exception of England, which refused to give up the English pound. Greek Deficits and Inflation Typically, when a country takes on too much debt there are various market forces that “fix” the problem. For one, the bond markets begin to demand a higher …

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Will the Economy Recover in 2012?

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There has been a lot of good news about the economy in 2012. With each passing month, it seems that unemployment drops further, the stock market goes higher, and the housing market… well, that’s why there is still a pretty big question mark out there. Economy 2012 Outlook Typically, after an economic downturn, the stock market leads the way (it’s a leading indicator) by rising in the months before various economic reports (lagging indicators) start rising. If all goes well, the stock market’s rise, is legitimated by improving corporate earnings and then backed up by an increase in hiring that improves the employment outlook across the economy. Once these things happen, the U.S. economy kicks into gear and things march upward until the next correction, recession, or god forbid, depression. The stock market has gone nearly straight up since the beginning of 2012. Earlier this year the Dow went over 13,000 for the first time since 2008. Not far behind, the S&P 500 index passed its 2008 high-water mark earlier this month. And, as Reuters and other report, the number of Americans filing for new unemployment benefits dropped to a four-year low. This follows the last few months of good …

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Apple Stock Paying Dividends

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Apple (AAPL) announced that after years of building up a massive pile of cash with its record earnings that it will begin to return some of that money to shareholders. Apple will pay a quarterly dividend of $2.65 per share starting in July. It will also repurchase up to $10 billion in stock over the next three years. So, what does this Apple announcement mean for the stock and for the company? Apple Dividend At first blush, Apple’s announced quarterly dividend seems very large. But, how much is Apple’s dividend? It works out to $10.60 per year. That’s higher than most companies pay out in dividends. However, remember that Apple’s stock price is much higher than most companies. The stock currently trades around $600 per share. That makes the dividend approximately 1.8 percent, which, while respectable, is nothing to write home about. Why did Apple announce a dividend now? There are several reasons that Apple has finally decided to start paying a quarterly dividend after refusing to do so for years. First, and foremost, is that Steve Jobs is no longer around. Apple’s iconic CEO had the street cred to tell people, “No dividend,” no matter how high the companies cash balance got without …

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Dow 13,000 What Does It Mean?

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As always, the mainstream media perked up about the stock market and investing world when the Dow Jones Industrial Average passed the made-f0r-headlines 13,000 level. The guys that write news story headlines love round numbers, maybe because everyone else does too. But, just like our infatuation with round number birthdays, such as turning 40, there is no real difference between Dow 12,956 and Dow 13,000, just like there is no real difference between being 39 and being 40 years old. Is Dow 13,000 Meaningful? The 13,000 number is purely psychological, but it does provide an opportunity to take a look at how the stock market and the economy are doing lately. First, and foremost, most storied correctly noted that this is the first time the Dow has managed to gain the 13 K level since 2008. That is significant for two reasons. One, 2008 basically marks the beginning of the stock market crash caused by the bursting of the housing bubble and the subsequent financial crisis, all of which triggered what has become known as The Great Recession. Two, it means that maybe some investors should be seeing a recovery in their portfolios. It is tempting to draw the conclusion that …

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April Jobs Report Could Have Big Impact On Stocks

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The April jobs report is due out from the U.S. Labor Department on Friday. While economic statistics typically have a temporary effect on Wall Street before being shoved aside by whatever bit of news or data arrives a few days later, the April jobs number could be a bigger deal than usual. Recently, the Federal Reserve left interest rates unchanged. Following the announcement, Fed Chairman Ben Bernanke held the first ever Fed press conference in which he laid out the Fed’s view of the U.S. economy. He suggested that the economic recovery is slowing. He didn’t use the word fragile, but plenty of people heard it anyway. He also suggested that inflation was tame and that any uptick was dwarfed by the greater potential for a slowdown in growth. Jobs Key to Economic Recovery Business spending has been measured, despite a tiny boom going on in Silicon Valley. Consumer spending has been whacked by not only by widespread job losses, but also by the housing market crash and subsequent collapse of the mortgage industry. Many homeowners have no equity left in their homes. Those that do are finding that terms for second mortgages are no better than the difficulties faced …

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Banks to Buy Back Shares, Raise Dividends After Passing Fed’s “Stress Test”

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Several major banks, including most of those deemed “too big to fail,” are set to raise their dividends and announce large stock repurchases after passing the latest Federal Reserve “stress test.” Banks and financial institutions that have repaid their government bailout TARP funds and passed the stress test have been given the go-ahead by the Federal Reserve to make new capital-based decisions such as increasing their dividend payouts or doing share buybacks. Shortly after the Fed’s announcement, the financial sector came alive with press releases about how the banking stocks would take advantage of the new allowances. J.P. Morgan announced both a higher dividend and a share buyback, for example. Banks Raising Dividends After Drastic Cuts During the height of the banking crisis, most banks and financial stocks were forced to cut their dividends to minimal levels, or even to zero. Eliminating their dividends took away one of the major reasons to invest in financial stocks, which historically have provided solid dividend income to investors. Even the the financial sector’s best preferred stocks were forced to slash their dividends. The quick moves by the big banks and Wall Street firms to reverse their dividend cuts offer a glimpse at how …

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Unemployment Report Bad News for 2011 Economy Recovery

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The November jobs report came in worse than predicted. Recent reports suggesting that consumers were spending more money and that first-time unemployment claims were dropping suggested that the Great Recession might be coming to an end in 2010. Alas, the jobs report shatters that idea for the short-term. A recovery without new jobs isn’t worth the paper it’s statistics are printed on. Ongoing economic recovery requires that not just the people who are currently employed go back to spending and non-fear based economic decisions, but also that more people join their ranks. Unfortunately, that can’t happen if people are not returning to being employed. Smart money decisions will swing from taking advantage of low prices and low interest rates to saving cash. While increasing savings is good on a personal level, it isn’t necessarily good for the economy overall. The possibility that jobless benefits will begin to run out for millions of Americans only adds an additional weight to the overall economy. Put it together with States losing billions of dollars worth of Federal money from economic stimulus programs ending in 2011, and you have a lot of negatives pulling on the first quarter of 2011. The Federal Reserve’s recent …

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Government Making Profit From Bank Bailout?

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The huge government bailout of banks during the height of the banking crisis was the cause of much concern and hand wringing. Among political types, the debate centered around the theoretical concepts of whether or not the government should be involved in propping up banks and whether or not such involvement constituted something “socialist.” Whenever the political theories involved, as a more practical matter, there were some very real concerns about how and when the government might be able to undo some of the things they had done. One example was the government’s bailout of Citigroup. The Treasury provided $25 billion to the banking giant. In exchange, it got an enormous amount of preferred stock. At the peak, the U.S. Treasury owned approximately 27 percent of Citigroup stock. This unprecedented arrangement left some very difficult questions up in the air to be determined later, not the least of which is how does someone — the U.S. Government included — get out of a 27 percent position in a major financial institution without causing more problems? Thankfully, recovering markets and an improving situation at Citigroup have made it unnecessary to answer such questions under difficult scenarios. Rather, the Treasury has been …

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Facebook Valuation Estimates Billions Wrong?

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Now that the new Facebook movie is coming out, even more people are going to be clamoring for information about just what Facebook is, what the Facebook company is like, and, of course, how to invest in Facebook. The catch is, there is no Facebook. Not a Facebook company you can invest in at least. Should savvy investors be looking to buy Facebook stock when they can? Investing In Facebook Let’s start with the basics. When most people think of stock, they think of the stocks that trade on the major stock exchanges like the New York Stock Exchange. The companies that trade their stocks here are called publicly-traded companies, because shares of their stock are bought and sold on public exchanged like the NYSE, AMEX, and NASDAQ. There are also many companies, both big and small, that do not have stock shares that trade on the public markets. These companies are often referred to as privately-held companies, although that is not always a technically accurate decision. Facebook is NOT a publicly traded company. There are no Facebook shares of stock to buy on the NASDAQ or any other public stock exchange. That means that there is no way to …

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