Merger Mania on Wall Street

M&A activity continues to heat up on Wall Street. Last week rumors were circulating that P&G would buy Gillette, and today three acquisitions were announced. SBC is acquiring AT&T for $16 billion. MetLife will buy Citibank's Travelers Insurance Group for $11.5 billion. Kodak is buying Creo for $980 million. At 10:20 a.m. PST it appears that Citibank's stock is performing the best from the news, up $.80 or 1.65%. Citibank's stock also pays $1.76 dividend per share giving it 3.60% yield at its current price. As a big cap stock it generally experiences less volatility, and steady growth, but don't expect some high flying get rich stock. The mean recommendation on the stock is a buy with future prospects bright, and the nice dividend yield it carries.

For more information on these stories follow the links below:

Cnnfn - Urge to Merge

SBC to Buy AT&T

MetLife to buy Citibank's Travelers Group

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Changing Jobs. The 401K Options.

In today's world people will generally switch employers 5-7 times before they retire, if not more. The looming question...what should I do with my old 401K Plan? The options are either to roll it over into your new employer's 401k plan, or into an IRA Rollover. The variables that make up this decision tend to be vast, and sometimes confusing. The following article from CnnFn will aid in making that decision. Click the link for more details...Rolling Over Your 401k.

Please post comments that may help people with this decision.

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ING Direct's Great Rate Finally Toppled!!

For months now ING Direct has been offering America's highest yield savings account with no minimums and no fees. After much success the competition has decided to move in. New York based bank, Emigrant Bank, has decided to up the Ante. On January 5, 2005 in a press release they announced to the world the formation of Emigrant Direct, which is essentially a direct copy of ING Direct's business model, however, the interest rate is higher. Currently ING Direct offers 2.35% interest rate. Emigrant Direct is now offering 3.00%. That may not sound like much, but on $10,000 that equates to $65 a year, or $5.42 a month. Now imagine if you have more than $10,000 you would like to move into this account. The Emigrant Direct account also features no minimums and no fees. It truly is a boon to the consumer.

Until just recently I had not heard of Emigrant Bank, but after some research it appears to be a very solid bank. It has been in business since 1850, and operates primarily in the New York area.

The following links will provide with you more information:

Emigrant Direct - American Dream Account

Emigrant Bank Main Site

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Consumers to Loose in DVD Format War

The DVD format war will heat up this year as the fight over the red laser and blue laser rage on. The war centers on the memory capacity of DVDs. DVDs that can be read by the new blue laser contain significantly more memory. If the industry leans heavily on the blue format, consumers will need new DVD machines and have to start building their DVD library from scratch. Also the the new DVDs will sell around $20-$25 versus the current average of $15. For more on this story follow the link the below.

The DVD War

Other DVD Links

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The College Savings Game

The Christian Science Monitor reported in 2003 that higher education costs were up 47% at public universities, and 42% at private universities from 1994. It dubbed this astronomical rise the “Tuition Tsunami.” The overarching problem with this substantial increase in higher education costs is that lower to middle class individuals are being squeezed out of the chance to improve their socioeconomic status, and the middle to upper class folks are beginning to experience a budget crises.

The average individual obviously cannot stop this giant tidal wave alone, however, the government has designed some weapons to aid in combating this enemy. As with any enemy your chance of survival is greatest when dealt with earliest. It is unwise and potentially lethal to wait to combat an enemy when he is at the gates. When the watchman on the watchtower spot the enemy miles out is when the time has come to defend the people. The same is true for paying, or helping a child pay for his or her higher education. The time to combat the enemy is now. Procrastinating the initiation of an effective strategy to combat this enemy will only lead to despair and crises.

Thankfully, the government has created a few weapons to aid in the defeat of this enemy. While these weapons are nowhere near perfect, it is better to fight with what you have, then to not fight at all. The primary two weapons the government has created are the state sponsored “529 Plans,” and the federally sponsored “Coverdell Educations Savings Account,” formerly the Education IRA.

The state sponsored “529 Plans” are generally either a tax-free investment vehicle or a pre-paid tuition plan. The tax-free investment vehicle provides tax-free growth at the federal level, and tax-free withdrawals for qualified education expenses. It does not provide a tax deduction at the federal level for the year of contribution, however, many states do provide a deduction on your state income taxes for residents of that state. The pre-paid tuition plan allows parents to lock in current tuition rates; however, it means your child must attend that specific state university. For more information on College 529 Plans click the following link…College 529 Plan Facts.

The Coverdell Education Savings Account is a federally sponsored education savings vehicle that works much like a ROTH IRA. You’re not allowed any tax deduction in the year of contribution, but the earnings grow tax free, and withdrawals for qualified education expenses are not taxed. The drawback to the Coverdell Account is the maximum yearly contribution is capped at $2,000, and begins to phase out for individuals with higher adjusted gross incomes. For more information on Coverdell Savings Accounts click the following link...Coverdell Facts.

Remember the time to fight the tide of rising higher education costs is now.

For additional information click below:

College 529 Links

Coverdell Links

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Stocks Take it on the Chin

The market was beat to pieces today, even after IBM and Yahoo posted better than expected earnings yesterday after the closing bell. The Dow was down 88 points at the close of trading today.

The earnings season is in full swing, but it seems the market is reacting in its own way regardless of earnings reports. Ebay missed analyst expectations by $.01, and its shares were down 12% for the day. The following companies are set to release their earnings report early Thursday: Citigroup, Continental Airlines, Delta Airlines, and Ford Motor Company. The wise investor should watch how the market moves after these reports are released in order to assess the mood of the market, and where it might be headed over the course of the next few months.

Click Below For Stock Knowledge & Advice Links:

Stock Advice & Knowledge

Click Below For More Details:

Cnnfn - Stocks Shredded

Stocks Higher. Housing in Question.

The stock market was considerably higher today as trading moves into the third week of 2005, and past the post year sell off, which brought the broader markets lower for many of the trading sessions in 2005. The Dow was up 70 points today. Another boost for after hours trading was better than expected results posted by IBM and Yahoo.

The other area of the economy that is still in question is housing. The past five years have brought extraordinary, if not unrealistic gains for housing. The question remains whether this has created a real estate bubble that is about to burst and destroy many who have staked their fortunes on real estate's siren song of eternal gains.

For more details on these economic issues follow the links below:

Stocks Rise Again

Housing's Big Question

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Apple Shares Soar!!!

Shares of Apple Computer skyrocket in after hours trading. At the close of the market the shares were up $.90 on very positive news regarding its financial results. At 3:30 p.m. Pacific Standard Time the shares were up an additional $7.83, or 11.96%. Apple's net income for the first fiscal quarter ended December 25, 2004 was up nearly five times to $295 million from $63 million a year ago. Apple's EPS went from $.17 cents a share to $.70 cents a share. The high end of analyst expectations was $.55 a share. The stock has been on a tear since October. On October 8, 2004 the stock closed at $39.06. It has almost doubled in less than three months. The stock's above normal return is most likely credible to Steve Jobs' visionary leadership and uncanny ability to make electronic products not only functional, but cool.

Related Links Below

Apple Current Stock Quote

CnnFn Full Apple Story

Cool Apple Gadgets

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Apple Rumors Official

What has been rumored on the internet for weeks became official today at the MacWorld convention in San Francisco. Apple will begin introducing stripped down versions of its IMac and super popular IPod.

Click Below For Full Details:

CnnFn Full Details

Apple's New IMac Mini

Apple to Take Center Stage

Steve Jobs, the visionary CEO of Apple, is set to turn the computer world upside down again. Reports have been circulating on the internet that Jobs will unveil a lower priced IMac at the MacWorld convention this month. The IPod, which has seen phenomenal success, is seen by many as the stepping stone for PC users to convert to Mac systems. Apple sold 4 million IPods in the 4th quarter of 2004, which is almost all the IPods sold to date. The trend is picking up pace, and Apple has the marketing savvy to capture the bulk of the profits associated with it. If it can also increase its market share among computer users its profits should soar. We will have to wait out 2005 to see how this whole thing plays out.

Links to Full Coverage Articles:

Business Week Coverage

ThinkSecret Web Site - Credited With Blowing the Story Open

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Supreme Court to Hear Anderson Case

The U.S. Supreme Court agreed on January 7, 2005 to hear an appeal by Arthur Anderson regarding its 2002 conviction of obstruction of justice. The conviction in 2002 resulted in the loss of 28,000 U.S. jobs, and the demise of an 89 year old firm that had once reviewed the books of over 1,300 public companies. Chicago based Arthur Anderson now employs only 200 individuals, mostly lawyers and administrative staff to defend itself against an onslaught of shareholder lawsuits as a result of the accounting failures of its public clients. However the Supreme Court should rule in the Anderson case, it is still very unlikely the firm will experience a rebirth of any kind.

For Full Coverage by Washington Post on this Story Click Below:

Washington Post Full Coverage

Other Interesting Links:

The Remains of Anderson

Former Anderson Center For Education
Rumored to still be owned by Arthur Anderson

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Building Wealth

Cnnfn has been publishing short biographies on people they consider, “Millionaires in the Making.” The stories are generally centered on the real estate investment accomplishments of the folks in the stories, and while the stories can be somewhat gloated at times, there are lessons to be learned.

The primary lesson is the poignant fact that wealth is generated through ownership. It is the ownership rights to the cash flows and equity growth of appreciating assets that builds wealth.Many people equate wealth with a high paying job, and put to the right use, that income can produce wealth, but the high paying job in and of itself does not constitute wealth. This is a very clear distinction. Thomas J. Stanley and William D. Danko make this distinction clear in their book, “The Millionaire Next Door,” when they define the difference between “Income Statement Affluent (ISA)” and “Balance Sheet Affluent (BSA).” In short, “Income Statement Affluent” individuals have big incomes and generally big debt. “Balance Sheet Affluent” individuals own the rights to appreciating assets that produce cash flows. The rights to these assets generally lead to big incomes, but the distinct difference between the ISAs and BSAs is the BSAs own the rights to their income, and the ISAs must always make an exchange for their income. The primary form of exchange is their time offered through employment.

The knowledge of these facts should spur anyone to action in acquiring cash flow producing, capital appreciating assets. The following are examples of assets that appreciate over time and provide cash flow:
(this list is no way exhaustive)

- Mutual funds
- Dividend paying stocks
- Real estate
- Ownership of a business
- Copyrights and Patents

While it is very obvious the acquisition of any asset requires capital and risk tolerance, this alone should not be your defeat. The creative and desirous mind can accomplish great things. Mutual funds and dividend paying stocks can be purchased by virtually anyone, and many brokerages now allow you to purchase incremental shares in order to allow you to invest small amounts over time (see http://www.sharebuilder.com/).

Real estate on the other hand generally will require some form of up front investment to purchase a rental property, but if you already own a home, you can borrow against your home equity to provide a down payment for a rental property. In the beginning, if your rental property breaks even you are doing well. Over time the cash flow will increase and equity will grow, thus providing you with a great source of income and wealth.

In your search for financial security, remember that ownership will create the most wealth and security in the long-term. Manage your income well, and invest your excess income into wealth creating assets. Twenty years from now…you’ll be thankful you did.

The following are related links to this article:

Cnnfn - Latest Story

http://sharebulder.com/

Edward Jones Brokerage

Google - Real Estate Investing


Please post your comments and insights to this article to benefit all readers.

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Former WorldCom Board Settles

Ten former WorldCom board members have settled a stockholer class action lawsuit. The former directors will hand over 20% of their net worth in an estimated $54 million dollar settlement. At least $18 million dollars will come from the former directors' personal wealth.

For full details follow the link below:

CnnFn - WorldCom Settlement

SEC Set to Alter IPO Process

The SEC is currently accepting comments on its proposal, “Securities Offering Reform- #S7-38-04.” This proposal is set to alter the rules for IPOs. Many experts see the proposal as a step in the right direction. The proposals range from the ridiculously obvious, such as allowing underwriters to email IPO pricing information to investors, to far more reaching proposals such as allowing individual investors to listen via web cast to the “Road Show.” The “Road Show” is the presentation management puts on for institutional investors in an attempt to convince them to invest in the company. Typically management visits numerous institutional investors and presents to them the company, and answers questions.

This proposal would be a boon to the small investor, because for the first time the average investor could get a feel for management, and hear answers to questions posed by institutions willing to commit millions of dollars. It would make the IPO process much more fluid, and allow the little guy to gain access to more information regarding the company.

The following are links related to the proposed reform:

Complete SEC Proposal

Submit Comment to SEC Proposal

Cnnfn - Article on Reform

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Stocks Fall on FED Worrying!!!

The Nasdaq is at a 5-month low and the Dow is down over 100 points on worries from the Federal Reserve about higher prices. This is yet another clear signal that the Federal Reserve will continue its rate hikes into 2005. While rate hike increases were expected, the Federal Reserve's concerns about inflation are troublesome for Wall Street. The biggest concers noted in minutes released from the Federal Reserve Meeting on December 14, 2004 were the weak dollar, and high energy prices.

The weak dollar has been a boon to companies who export American products, but it has far more reaching effects. The biggest to note is the fact that Americans will soon start paying higher prices on imported products from televisions to cars. This will hurt the American economic recovery, because it means less money for Americans to spend, and less profits that flow to the bottom lines of companies, which boost stock prices, and ultimately increase the wealth of American investors.

For more on this story see the following articles:

Market Watch - Markets Drop

Market Watch - FED Minutes

CnnFn - FED Coverage

CnnFn - Market Sell Off

Comments are always welcomed.

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Sarbanes-Oxley Nightmare Continues…

The Sarbanes-Oxley Act of 2002 is a futile attempt of Congress to legislate honesty. It is an overbearing response to the corporate failures of Enron, WorldCom, and others. It is forcing small cap companies to de-list from the stock market, and other private companies to rethink going public at all. When Microsoft went public in 1986, it was nowhere near the size it is today, and the same is true for up and coming companies that will boost the wealth of American investors. Should Sarbanes-Oxley prevent promising companies from going public, the wealth that company creates will not be shared with the public. This could prove the most damaging of all to the American public.

While Effective internal control structures do prevent fraud within the company, over regulating this aspect of public companies will prove more of a damper than a boost to the economy.

Lets hope the SEC rethinks the demands of Sarbanes-Oxley.

Links to Related Articles:

Fool.Com Article

Management Consultants Article

Accountancy Age Article


See also related Wiser Money article on December 28, 2004.

Comments are always welcomed and encouraged.

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Yahoo, Google Surge! Dow Down.

The first day of trading for 2005 started out in the red, then was up by midday, but by the closing bell the Dow was down nearly 54 points. Google and Yahoo surge on positive analyst report from Goldman Sachs that online advertising revenues should grow significantly in 2005.

The post-election bull may have lost its footing today, but investors will be watching carefully the next few days as the "First-Five Trading Days" theory looms over Wall Street.

Detailed Articles on today's market moves:

Google, Yahoo Up!!

CnnFn Market Wrap

The Markets' First Five Days of 2005

The markets will open up tomorrow for the first time since 2004. The holiday parties will be over and it will be time for Wall Street to focus on profit making for 2005. Many investors will be watching the first five days of trading in 2005 as an indication of things to come in the new year. The trading will probably be relatively light, considering most large investment institutions such as mutal funds positioned themselves for the first part of 2005 during the last month of 2004. The big cap stock earnings updates start to trickle in during the last part of January, which will certainly boost trading volume among the big cap stocks.

The average investor should follow a prudent course of action during these first days of trading in 2005. There is no need to rush to judgement and alter your market position drastically, unless it was planned during the last weeks of 2004 for tax purposes. If you are positioned for the long-term growth of the stock market you will be fine. For those of you trying to reap short-term profits it will serve you well to keep abreast of news and reports coming from Wall Street that may affect your investments.

In short...be wise in your decisions during this first week of trading in 2005.

The following are links to articles related to the first week of trading:

CnnFn- First Week 2005

CBS Market Watch - First Week 2005

CBS Market Watch- Stocks to Watch

Peering into 2005

The New Year has finally arrived. A time where most of us reflect on the past year, and look ahead into the next with confidence and zeal. A time of renewal and commitment to our goals and principles. A time of making and creating our dreams.

The world seems to pause, if but for a moment, then swiftly and quickly moves on its way

Most of you are probably wondering at this point; what any of this has to with saving, spending, and living wisely. The answer is choices. Life is much like a stud poker game. We are each dealt different hands and must play that hand to the best of our ability. Each of us is unique, and it is the betterment of that uniqueness that betters the world. Just as the decision to be a better person takes effort, so does the act of saving, spending, and living wisely. The winner is not he that dies with the most money, but he who has played his hand to the best of his ability. It is he who has taken his God-given talents and used them for the betterment of mankind. It is he who has used them to improve the lives of his fellow beings.

In 2005 lets all of us not only commit to saving, spending, and living wisely, but most importantly commit to positively affecting those around us.

As you ponder the upcoming year…consider the wise words from Robert Frost in his poem, “The Road Less Traveled.”

The Road Less Traveled

Two roads diverged in a yellow wood
And sorry I could not travel both
And be one traveler, long I stood
And looked down one as far as I could
To where it bent in the undergrowth

Then took the other as just as fair
And having perhaps the better claim
Because it was grassy and wanted wear
Though as for that, the passing there
Had worn them really about the same

And both that morning equally lay
In leaves no step had trodden black
Oh, I kept the first for another day!
Yet, knowing how way leads onto way
I doubted if I should ever come back

I shall be telling this with a sigh
Somewhere ages and ages hence
Two roads diverged in a wood
And I took the one less traveled by
And that has made all the difference

Robert Frost