Over the recent holiday weekend, millions of U.S. drivers fretted about the price of gasoline. There are two days left in the poll about gas. Take the survey now.
Where will Gas at the pump be on Aug 1st?
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Thursday, May 29, 2008
Wednesday, May 28, 2008
Phishing risk rises
Banks and brokerage firms continue to have problems with sophisticated phishing schemes targeting their customers. Many brokerage firms have released records on the amounts that they had to pay back to account holders who have been cleared out electronically. The numbers persistently grow at a staggering rate each year.
Recently a large international cybercrime ring was taken down. These crooks used the internet to facilitate the theft and misuse of credit and bank card numbers. Spam that sent account holders to fraudulent websites was the common starting point in clearing out the victims accounts.
Two recent articles discussed the situation. The Information week article provides a list of impacted institutions; if you have credit cards or accounts with these firms then you should be on alert. The SC Magazine article focuses on technical measures such as SPF, and DomainKeys which can be used by the industry to reduce the problem.
International Cybercrime Ring Busted
Hot or Not: Winning against the phishing assault
Recently a large international cybercrime ring was taken down. These crooks used the internet to facilitate the theft and misuse of credit and bank card numbers. Spam that sent account holders to fraudulent websites was the common starting point in clearing out the victims accounts.
Two recent articles discussed the situation. The Information week article provides a list of impacted institutions; if you have credit cards or accounts with these firms then you should be on alert. The SC Magazine article focuses on technical measures such as SPF, and DomainKeys which can be used by the industry to reduce the problem.
International Cybercrime Ring Busted
Hot or Not: Winning against the phishing assault
Tuesday, May 27, 2008
Dividends: Selecting the best instruments
In an environment where the market is tanking, dividends have returned to the mindset of many investors.
As outlined in earlier HingeFire material, the best place to find straight out dividend yield with some degree of safety is within Master Limited Partnerships (MLPs), Trust Preferred Securities (TruPS), and Royalty Trusts.
A number of recent articles point to Bond ETFs, REITS, common stocks with dividends, and bank stocks as a source of possible dividends. One recent article from Ben Stein pushes investors in these directions. This advice is faulty for many reasons; this is not the time to over-weight these instruments in your portfolio. There are better dividend yield opportunities with less risk.
Bond ETFs normally do not outperform actively managed bond mutual funds. In an environment where the credit risk of bonds is increasing, and spreads increasing while base interest rates are falling; simply bolding a basket of bonds in an index ETF is a recipe for under-performance.
The yields on REITs are dropping as well as their price. Shortly the payouts on many REITS will be on par with safe bank CDs. Investors in REITs are likely to suffer the continued double whammy of falling yields and an equity price drop.
As the economy further deteriorates, the dividends on many stocks will be cut. The most at risk are bank stocks; the earning results due to the subprime crisis have been dismal. Most banks have already cut their dividend payouts; giants like Bank of America (BAC) are likely to still cut their dividends by close to 50%. This would bring the yield to 3.5% rather than the cheery 7.1% gleefully outlined in the article.
From a risk versus yield perspective, the best situations in the market are Master Limited Partnerships (MLPs), Trust Preferred Securities (TruPS), and Royalty Trusts. Investors in search of yield should focus on these instruments over the upcoming 24 months. As always, it is best to hold these types of dividend securities in a tax-free account such as an IRA. Keep in mind that dividend-bearing securities are simply one component of a properly diversified portfolio.
As outlined in earlier HingeFire material, the best place to find straight out dividend yield with some degree of safety is within Master Limited Partnerships (MLPs), Trust Preferred Securities (TruPS), and Royalty Trusts.
A number of recent articles point to Bond ETFs, REITS, common stocks with dividends, and bank stocks as a source of possible dividends. One recent article from Ben Stein pushes investors in these directions. This advice is faulty for many reasons; this is not the time to over-weight these instruments in your portfolio. There are better dividend yield opportunities with less risk.
Bond ETFs normally do not outperform actively managed bond mutual funds. In an environment where the credit risk of bonds is increasing, and spreads increasing while base interest rates are falling; simply bolding a basket of bonds in an index ETF is a recipe for under-performance.
The yields on REITs are dropping as well as their price. Shortly the payouts on many REITS will be on par with safe bank CDs. Investors in REITs are likely to suffer the continued double whammy of falling yields and an equity price drop.
As the economy further deteriorates, the dividends on many stocks will be cut. The most at risk are bank stocks; the earning results due to the subprime crisis have been dismal. Most banks have already cut their dividend payouts; giants like Bank of America (BAC) are likely to still cut their dividends by close to 50%. This would bring the yield to 3.5% rather than the cheery 7.1% gleefully outlined in the article.
From a risk versus yield perspective, the best situations in the market are Master Limited Partnerships (MLPs), Trust Preferred Securities (TruPS), and Royalty Trusts. Investors in search of yield should focus on these instruments over the upcoming 24 months. As always, it is best to hold these types of dividend securities in a tax-free account such as an IRA. Keep in mind that dividend-bearing securities are simply one component of a properly diversified portfolio.
Get Coupons on the Web
With the prices of food and basic necessities rising weekly, the importance of saving money has risen to a new urgency in many families. Coupons – a normally ignored component of Sunday’s newspaper have now become an important part of the family budget.
Even so last year only 1% of coupons were redeemed. This rate is expected to rise this year. One issue with the low redemption rate is that many paper coupons are for articles not normally purchased by families. One bit of good news for consumers is that manufacturers are offering more coupons this year for commonly purchased items, even as they raise prices.
One resource for coupons is the web; there are a number of free and paid sites that offer coupons. It is no longer necessary to limit your search to the Sunday paper. A recent Wall Street Journal online article provides an overview of the “The Best Sites for Coupon Clipping”.
Even so last year only 1% of coupons were redeemed. This rate is expected to rise this year. One issue with the low redemption rate is that many paper coupons are for articles not normally purchased by families. One bit of good news for consumers is that manufacturers are offering more coupons this year for commonly purchased items, even as they raise prices.
One resource for coupons is the web; there are a number of free and paid sites that offer coupons. It is no longer necessary to limit your search to the Sunday paper. A recent Wall Street Journal online article provides an overview of the “The Best Sites for Coupon Clipping”.
Thursday, May 22, 2008
Countrywide Chairman tells Homeowners they are Disgusting
Countrywide Financial Corp. Chairman Angelo Mozilo reaped $132 million as the mortgage lender got hammered in 2007. It appears this wad of cash has not made him appreciative of his customers; he views homeowners as “disgusting”.
Apparently Mozilo does not know the difference between the reply and forward buttons, setting the stage to send an absurd email response to a homeowner. It does reveal the contempt that the executive holds for homeowners seeking help with unaffordable adjustable-rate mortgages, loans that were pressed on them due to Countrywide’s inappropriate business practices.
As outlined by the government and consumer groups, the mortgage giant has a history of focusing on loans that generate the maximum fees even if they were totally unsuitable for the homeowners, while not properly explaining the terms of the loan. Furthermore many loan agents, as shown in this case once again, made “promises” about refinancing and other loan attributes that would defined in most courts as fraud.
Despite these mortgage companies claiming in Washington that they are taking steps to alleviate the pain of homeowners; the email exchange underlines the stark reality that the mortgage giants actually could give less than two hoots about these mortgage-holders.
Mozilo on distressed borrower's appeal for help: "disgusting"
Countrywide Financial Chairman Angelo Mozilo's e-mail sets off a furor
Apparently Mozilo does not know the difference between the reply and forward buttons, setting the stage to send an absurd email response to a homeowner. It does reveal the contempt that the executive holds for homeowners seeking help with unaffordable adjustable-rate mortgages, loans that were pressed on them due to Countrywide’s inappropriate business practices.
As outlined by the government and consumer groups, the mortgage giant has a history of focusing on loans that generate the maximum fees even if they were totally unsuitable for the homeowners, while not properly explaining the terms of the loan. Furthermore many loan agents, as shown in this case once again, made “promises” about refinancing and other loan attributes that would defined in most courts as fraud.
Despite these mortgage companies claiming in Washington that they are taking steps to alleviate the pain of homeowners; the email exchange underlines the stark reality that the mortgage giants actually could give less than two hoots about these mortgage-holders.
Mozilo on distressed borrower's appeal for help: "disgusting"
Countrywide Financial Chairman Angelo Mozilo's e-mail sets off a furor
Wednesday, May 21, 2008
Nuveen finds a way out
Investment firms such as Nuveen that offer leveraged Muni Closed End Funds have been suffering an inordinate amount of stress over the past few months. The auctions of preferred securities issued by the companys' municipal closed-end funds continues to fail; leaving most of the firms in a situation where they need to either forced to redeem their preferreds or make other financing arrangements.
Earlier HingeFire articles outlined the issues in the market (see Auction Rate Stress Continues: Muni Bond Funds Impacted and Revisiting: Muni Bond Fund shorts).
Nuveen has obtained a commitment of up to $1.75 Billion to refinance the struggling auction rate preferred securities. This enables the company issue variable-rate demand-preferred instruments to replace the current ARPS. This effectively alleviates the pain be endured by Nuveen and places the firm’s Closed End Fund (CEF) products back into a liquid situation. The company has also taken steps to remarket the new shares with another financial firm.
These measures are excellent news for the holders of the Nuveen muni CEFs – most whom are common investors looking for tax-free income with minimal risk.
Nuveen gets infusion for auction rate securities
Earlier HingeFire articles outlined the issues in the market (see Auction Rate Stress Continues: Muni Bond Funds Impacted and Revisiting: Muni Bond Fund shorts).
Nuveen has obtained a commitment of up to $1.75 Billion to refinance the struggling auction rate preferred securities. This enables the company issue variable-rate demand-preferred instruments to replace the current ARPS. This effectively alleviates the pain be endured by Nuveen and places the firm’s Closed End Fund (CEF) products back into a liquid situation. The company has also taken steps to remarket the new shares with another financial firm.
These measures are excellent news for the holders of the Nuveen muni CEFs – most whom are common investors looking for tax-free income with minimal risk.
Nuveen gets infusion for auction rate securities
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