Estate Planning Newswire

Trillion-Dollar Pension Gap Just Beginning Of States' Fiscal Woes - Forbes - February 19, 2010
Figure doesn't account for market drop, $500 billion in unfunded health care promises.

What Taxes Will States Turn To Next? - Forbes - February 19, 2010
They've tackled the wealthy, corporations, tobacco and alcohol. Now some strapped states may be forced to confront tax system overhauls.

The Seven Most Universal Job Skills - Forbes - February 19, 2010
As the unemployment rate hovers around 10%, learn what skills you need to avoid becoming part of the statistic.

IRS 400 Suggests Path To Forbes 400 - Forbes - February 19, 2010
Want to join the Forbes 400? Build unrealized capital gains and cash them in when tax rates are lowest.

Why Financial Planners Need To Go Beyond Numbers - Forbes - February 19, 2010
Focus on client emotions instead of analytical tools.

Can You Live A Debt-Free Life? - Forbes - February 19, 2010
Avoiding loans goes against the norm, but it can be possible--and enjoyable.

Estate Planning Term of the Week - Generation Skipping Transfer Tax - About.com - February 19, 2010
Like the past two estate planning terms of the week - Death Taxand Estate Tax- this week's estate planning term is another one that will continue to make headlines as the future of the federal estate tax continues to make headlines - Generation Skipping Transfer Tax(or GSTT for short).The Generation Skipping Transfer Tax is a tax that is assessed on property that is passed from one generation to a generation that is two or more levels below the generation of the person who is making the transfer. Transfers subject to the tax include direct transfers as well as transfers made through a trust.For example, a direct transfer of property from a grandparent to a grandchild would be subject to the generation skipping transfer tax, as well as a transfer made by a grandparent into a trust for the benefit of a grandchild. In addition, a direct transfer or a transfer in trust from one person to an unrelated person who is 37 1/2 years or more younger than the person making the transfer would be subject to the generation skipping transfer tax.In 2009 the federal government exempted transfers of up to $3,500,000 from the generation skipping transfer tax, but as of January 1, 2010 the Generation Skipping Transfer Tax was repealed along with the federal estate tax.Overview of Taxes That Affect an EstateOverview of Current Federal Estate Tax LawsWhat is a Trust?What is a Generation Skipping Trust?Estate Planning Term of the Week - Generation Skipping Transfer Taxoriginally appeared on About.com Wills &Estate Planningon Thursday, February 18th, 2010 at 08:16:46.Permalink| Comment| Email this

Shapely Stock - Forbes - February 12, 2010
Maidenform; Core-Mark Holding; Americas Energy.

Most Valuable REITs - Forbes - February 12, 2010
As the dust settles from the crash, some little-known property outfits are coming to the fore.

Electric Power Still The Best Utility Play - Forbes - February 12, 2010
Water utilities are gaining in popularity with investors but the real juice in the sector is electric power.

The Credit Card Debt Shuffle - Forbes - February 12, 2010
A balance transfer can save you big, but beware of the fine print.

ETF's Rearview Mirror Problem - Forbes - February 12, 2010
Exchange-traded fund sponsors are shamelessly pandering to the latest investment fads.

Delay Sought In California Web Tax - Forbes - February 12, 2010
Tax agency board member calls for small businesses to be given more time to comply.

Unintended Consequences - Forbes - February 12, 2010
A likely outcome of all the bailouts is a recurrence of inflation. Position yourself for it with converts, commodities and adjustable-rate preferreds.

Pawn Shop Steady Eddy - Forbes - February 12, 2010
Payday loans and pawn brokering keep Ezcorp performing at a high level.

Small Luxuries - Forbes - February 12, 2010
Half of affluent Americans are fretting about future financial losses. Making a virtue out of necessity, many of these people are consuming luxury but less conspicuously.

Back To Normal - Forbes - February 12, 2010
Experts are saying Americans will put 20% of their pay in piggy banks and curtail spending. I don't believe personal behavior will shift so radically.

Estate Planning Term of the Week - Estate Tax - About.com - February 12, 2010
Like last week's estate planning term - Death Tax- this week's estate planning term is another one that will continue to make headlines as the future of the federal estate tax continues to make headlines - Estate Tax.An Estate Tax is simply a tax imposed by a state or the federal government upon the right to transfer a deceased person's assets to his or her heirs. The tax is generally calculated by determining the date of death gross value of the deceased person's estate, subtracting allowable deductions such as executor commissions and attorney's fees, funeral and medical bills and outstanding debts, and then multiplying the balance by the estate tax rate.What is the Federal Estate Tax?How to Calculate the Gross Value of Your EstateHow to Calculate Your Estate Tax LiabilityWhich States Collect a State Estate Tax?Estate Planning Term of the Week - Estate Taxoriginally appeared on About.com Wills &Estate Planningon Thursday, February 11th, 2010 at 08:25:14.Permalink| Comment| Email this

Ocean State Surprisers, One's A Buy - Forbes - February 8, 2010
Rhode Island is the smallest state in the Union, but it's home to two companies that blew away expectations.

How To Profit From An Inefficient Market - Forbes - February 8, 2010
Yes, it is possible to consistently beat the stock market.

Tough Times Are Boom Times For Scams - Forbes - February 8, 2010
Complaints abound as con artists, often using the Web, target the down and out.

Sowing Bullish Seeds For Sprint - Forbes - February 8, 2010
A bet for a big gain in Sprint Nextel raises some eyebrows.

Estate Planning Term of the Week - Codicil - About.com - January 29, 2010
Need to make a change to your Last Will and Testament? Then you may need this week's estate planning term - a Codicil.A Codicil is simply a legal document that is used to change, add or remove specific provisions of a Last Will and Testament. A Codicil must be signed with the same formalities as a Last Will and Testament, otherwise it won't be valid.A common question that I'm asked is whether someone should make a Codicil or an entire new Last Will. Unfortunately there isn't one simple answer to this question since each client's estate planning goals are unique, and only an estate planning attorney can help each client make the best decision under each unique circumstance.What is a Last Will and Testament?What is a Codicil?How Do You Make Changes to Your Last Will and Testament?Is Your Last Will and Testament Valid?Estate Planning Term of the Week - Codiciloriginally appeared on About.com Wills &Estate Planningon Thursday, January 28th, 2010 at 08:25:59.Permalink| Comment| Email this

Blue Chips For The Dip - Forbes - January 29, 2010
The overall market weakness provides a good entry point into these household names.

Time To Bid On EBay - Forbes - January 29, 2010
The stock is a double since last spring but it still looks cheap. Jump aboard.

Qualcomm Options Fiesta - Forbes - January 29, 2010
As shares plunge, bears jump on board for the ride lower and contrarian bulls bet on a rebound.

Grind Higher With Coffee Stocks - Forbes - January 29, 2010
Peet's and Panera are two java sellers whose shares look good to buy, but you shouldn't rush into Starbucks.

Estate Planning in 2010 and Beyond - What Should You Do? - About.com - January 25, 2010
With the repeal of the federal estate tax on January 1, estate planning has entered a new era. While the initial reaction is to think that the days of planning to minimize estate taxes are gone, there are two problems with this train of thought: (1) the federal estate tax is scheduled to come back with a vengeance on January 1, 2011; and (2) 15 states and the District of Columbia still collect estate taxes at the state level and seven states collect a state inheritance tax.Of course, there has been much speculation that Congress will act "quickly"in early 2010 to reinstate the federal estate tax, but with the House and Senate focused on health care reform and far apart on where they believe the estate tax exemption and rate should be - the House favors a $3.5 million exemption and 45% rate, while the Senate favors a $5 million exemption and 35% rate - it may be impossible for Congress to get anything done with the estate tax in 2010. And besides, when has Congress ever acted quickly on a complicated fiscal matter?So what should you do about your estate plan during this unsettled time of federal estate tax repeal? Stay tuned for ten estate planning tips for 2010 and beyond.Overview of Current Federal Estate Tax LawsFederal Estate Tax Exemption: 1997 - 2011State Estate Tax and Exemption ChartState Inheritance Tax ChartWhat's the Difference Between an Estate Tax and an Inheritance Tax?What is the Future of the Federal Estate Tax?Estate Planning in 2010 and Beyond - What Should You Do?originally appeared on About.com Wills &Estate Planningon Monday, January 25th, 2010 at 08:25:46.Permalink| Comment| Email this

Vahan Janjigian On Equities - Forbes - December 29, 2009
Don't fall in love with the V-shape. The economy double-dips, the Dow corrects sharply and even gold bugs get swatted.

Connecticut Estate Tax Update - Legislature Votes to Postpone Exemption Increase - About.com - December 29, 2009
Due to ongoing budget woes, the Connecticut legislature voted on December 21 to postpone the increase of the state estate tax exemption from $2 million to $3.5 million which is scheduled to take place on January 1. The change was also supposed to increase the state gift tax exemption to $3.5 million and make the state estate tax applicable only to the amount an estate exceeds $3.5 million instead of the current law which taxes the first $2 million as well as everything above it. It still remains to be seen if Gov. M. Jodi Rell will veto the postponement.Legislature still at odds over strategy to trim deficitUnderstanding Death, Estate and Inheritance TaxesUnderstanding the State Estate Tax Exemption TrapState Estate Tax ChartOverview of Connecticut Estate Tax LawsUnderstanding Connecticut Gift TaxesConnecticut Estate Tax Update - Legislature Votes to Postpone Exemption Increaseoriginally appeared on About.com Wills &Estate Planningon Monday, December 28th, 2009 at 08:25:35.Permalink| Comment| Email this

Richard Lehmann On Fixed Income - Forbes - December 21, 2009
Inflation is definitely coming but it's more than a year away, so bonds are OK for now. Your best bets are gold and stock in the new GM.

How Much Money You'd Save By Skipping Christmas - Forbes - December 8, 2009
Skipping holidays could help shore up finances.

Beware Bank Gift Cards - Forbes - December 8, 2009
They're convenient, but hidden fees may leave recipients feeling shortchanged.

Should You Buy A Home In Foreclosure? - Forbes - December 8, 2009
Short sales, bank-owned homes are bargains but tricky to buy.

Estate Planning Myth vs. Reality #11 - Is Your Estate Plan Done When Your Documents Are Signed? - About.com - December 8, 2009
Estate planning myth:Once you sign your estate planning documents your estate plan is officially done.Estate planning reality:Not so fast - once the documents have been signed you may still need to take additional steps in order to insure that your estate plan will work the way you expect it to work.The recommendation:If you have a will-based estate plan, then you will need to confirm that the ownership of your property and the beneficiary designations for your life insurance and IRAs and 401(k)s correspond with your overall estate planning goals.If you have a trust-based estate plan, then you will need to fund your assets into your Revocable Living Trust and update the beneficiary designations for your life insurance and IRAs and 401(k)s so that how your property is titled and who you have named as your beneficiaries correspond with your overall estate planning goals.Aside from this, as your life changes so should the provisions of your estate plan. You should either work with an estate planning attorney who has an annual or semi-annual maintenance program to insure that you continue to monitor your plan in a systematic way, or if your attorney does not have such a plan, then make it a point to take your estate plan out of the drawer and look at it every year or every few years to insure that it still meets your estate planning goals.How to Choose Beneficiaries for Life Insurance PoliciesHow to Choose Beneficiaries for IRAs and 401ks if You're SingleHow to Choose Beneficiaries for Your IRAs and 401ks if You're MarriedWhat Are the Procedures for Funding a Trust?How Often Should You Review Your Estate Plan?Top Reasons for Updating Your Estate PlanEstate Planning Myth vs. Reality #11 - Is Your Estate Plan Done When Your Documents Are Signed?originally appeared on About.com Wills &Estate Planningon Monday, December 7th, 2009 at 08:25:23.Permalink| Comment| Email this

Income During Inflation - Forbes - November 30, 2009
Bonds are a risky venture when inflation is set to explode at any moment. Play it safe. Go for dividends.

The Brokerage Customer Is Always Wrong - Forbes - November 30, 2009
Some brokerages field complaints with a smile. That doesn't necessarily mean you'll get back the money you lost.

The Old Normal - Forbes - November 30, 2009
A decade ahead of lackluster earnings and economic growth? Don't believe that rubbish.

Estate Planning Myth vs. Reality #9 - Do You Need to Treat Your Beneficiaries Equally? - About.com - November 30, 2009
Estate planning myth:The only way to treat your children or other beneficiaries fairly is to make sure that in the end they each receive an equal share of your estate.Estate planning reality:Making it truly equal is an impossible task that should be avoided at all costs.The recommendation:OK, so you bought your oldest daughter her first car and you paid for your youngest daughter's emergency surgery and you put your only son through Harvard. So what? Each of your children is unique and has unique needs, and with those unique needs comes differing costs and expenses. Keeping a running tally of who got what and when they got it will drive you crazy. And have you thought about potential gift tax consequences, cost of living differences, and inflation? How will you take these things into consideration? Don't (well, you do need to be aware of gift tax issues), and don't try to make it equal. In the end someone will probably feel slighted or less loved, but the bottom line is that it really doesn't matter because there will be things that they took for granted or don't remember that can't be quantified in any monetary form. What is the Gift Tax?What Gifts Are Subject to the Gift Tax?What Gifts Are Not Subject to the Gift Tax?4 Tips for Getting Started on Your Estate PlanEstate Planning Do'sEstate Planning Don'ts10 Steps to Creating a Good Estate PlanEstate Planning Myth vs. Reality #9 - Do You Need to Treat Your Beneficiaries Equally?originally appeared on About.com Wills &Estate Planningon Sunday, November 29th, 2009 at 08:25:36.Permalink| Comment| Email this

Future of the Federal Estate Tax Website Covers it All - About.com - November 20, 2009
Recently I came across a terrific website that summarizes it all when it comes to collecting and organizing the latest information about whether the federal estate tax will stay or go in 2010: Future of the Federal Estate Tax. One section of the website lists all of the estate tax bills actively in front of Congress and provides a useful summary of the contents of each bill: Federal Estate Tax Bills in Front of Congress. A quick review of this section reveals that there are currently 16 bills that address estate tax reform in some shape or form circulating in the House and three circulating in the Senate. Stay tuned for a review of S. 2784- "A bill to amend the Internal Revenue Code of 1986 to permanently extend the estate tax as in effect in 2009, and for other purposes"- it was just introduced in the Senate on November 17 by Sen. Thomas R. Carper (D-DE) and Sen. George V. Voinovich (R-OH) .Last but not least another section of the website provides links to the latest news on the status of federal estate tax repeal, or not: Progress in Congress. When I reviewed this section at the beginning of the week there was an article which speculated that there was a very good chance that the estate tax debate would reach the floor of the House sometime this week, but yesterday there was an update stating that "House Democrats are likely to delay consideration of estate tax legislation until after the Thanksgiving recess."Or maybe after the new year.If you want to keep up to speed on the latest estate tax news through the website, you can subscribe to updates via email or through an RSS reader.What is the Federal Estate Tax?Overview of Current Federal Estate Tax LawsWhat is the Future of the Federal Estate Tax?One Year Patch Likely to End Estate Tax RepealUpdate on Predictions About the New Federal Estate Tax LawFuture of the Federal Estate Tax Website Covers it Alloriginally appeared on About.com Wills &Estate Planningon Thursday, November 19th, 2009 at 08:32:13.Permalink| Comment| Email this

Tape Talk - Forbes - November 13, 2009
Tickerville's Quint Tatro takes a weekly look at what the market indexes are saying.

Separating Luck From Skill - Forbes - November 13, 2009
In companies and in portfolios, luck matters in the short term, but skill matters in the long term.

Swapportunities - Forbes - November 13, 2009
Take profits on your premium-priced bonds and swap into lower-coupon bonds whose prices are closer to par.

Five Stock Prospects Under $10 - Forbes - November 13, 2009
Sometimes it pays to look where some investors fear to tread: shares selling for less than $10.

V Is For Vicious Cycle - Forbes - November 13, 2009
Abandon your dreams of a V-shaped recovery. The consumer is still too depressed to buy us a quick end to the recession.

Estate &Gift Tax Update - What Will the Annual Exclusion Be for 2010? - About.com - November 13, 2009
While the federal estate tax is currently scheduled to disappear on January 1, 2010, the federal gift tax is here to stay with the lifetime gifting exclusion amount remaining at $1,000,000 for 2010. Aside from this, the IRS recently issued Rev. Proc. 2009-50, which states that in 2010 the annual gifting exclusion amount will remain at $13,000 per gift to a non-spouse and the annual gifting exclusion amount for gifts made to a spouse who is not a U.S. citizen will remain at $133,000. The only gift tax change that will take effect in 2010 will be the reduction of the highest gift tax rate from 45% down to 35% - now don't get too excited.What is the Gift Tax?What Gifts Are Subject to the Gift Tax?Are Gifts to Your Spouse Taxable?What is an Annual Exclusion Gift?Annual Exclusion Chart: 1997 - 2010What is the Exemption from Gift Taxes?What is the Future of the Federal Estate Tax?One Year Patch Likely to End Estate Tax RepealEstate &Gift Tax Update - What Will the Annual Exclusion Be for 2010?originally appeared on About.com Wills &Estate Planningon Saturday, November 7th, 2009 at 10:25:36.Permalink| Comment| Email this

The Latest on Michael Jackson's Estate - Executors Branca &McClain vs. Joe Jackson - About.com - November 13, 2009
There were some surprising twists this week in the ongoing saga that is the probate of Michael Jackson's estate. While Jackson's mother, Katherine Jackson, dropped her objections to the appointment of attorney John Branca and music executive John McClain as the permanent executors of the estate, Michael's father, Joe Jackson, filed a 60-page petition wherein he asked for a $20,000 per month allowance from his son's estate and voiced his objections to the appointment of Branca and McClain.In the end Judge Mitchell Beckloff named Branca and McClain as the permanent executors because this was exactly what Michael stated in his Last Will and Testament:"That was a decision his son made,"Beckloff said in court. "I don't see how (Joe Jackson's) affected by the appointment of Branca or McClain as executors."The hearing on Joe Jackson's request for an allowance has been set for Thursday, December 10. Of course, since Joe Jackson was not named as a beneficiary of his son's revocable living trust (according to the petition for probate that was filed along with Jackson's 2002 Pour Over Willto open the estate, Michael's three children, his mother and several children's charities were named as the beneficiaries of the Michael Jackson Family Trust), Joe Jackson will have an uphill battle proving that he is entitled to receive even one penny from his son's estate.Judge Names Pair of Executors for Jackson EstateReading Michael Jackson's Will Isn't a ThrillerChoice of Permanent Executor of Michael Jackson's Estate DeferredMichael Jackson's Will vs. the Michael Jackson Family TrustLearn How to Follow Michael Jackson's Probate Court DocketThe Latest on Michael Jackson's Estate - Executors Branca &McClain vs. Joe Jackson originally appeared on About.com Wills &Estate Planningon Thursday, November 12th, 2009 at 08:25:12.Permalink| Comment| Email this

How to Dodge Higher Medicare Premiums - Forbes - November 6, 2009
Income-based premiums are set to jump, but seniors have some options.

What to Watch for Now at 8 Key Retailers - Smart Money - November 6, 2009
October sales are in. What do they mean for earnings season?

Stocks Surge Late, Dow Tops 10,000 Anew - Smart Money - November 6, 2009
New jobless claims decline, major indexes rise sharply on news.

What Happens When the Punch Bowl Goes Away? - Smart Money - November 6, 2009
The Fed didn't raise rates, but it will soon, and that could affect the markets.

Rally Powers ETFs Across Most Sectors - Smart Money - November 6, 2009
Jobless claims report and tech gains help bring out the bulls.

Estate Planning Myth vs. Reality #4 - Do You Really Need to Understand Your Estate Plan? - About.com - November 6, 2009
Estate planning myth:Everyone who has an estate plan was instrumental in creating it and understands what it says and does.Estate planning reality:Many estate planning attorneys fail to think outside of the box when planning their clients' estates. In other words, many estate planning attorneys have a specific type of estate plan that the attorney will draft for 99% of his or her clients. For example, the majority of an attorney's clients may have Revocable Living Trusts, broad powers of appointmentfor the surviving spouse, trusts for beneficiaries until the age of 30, and the requirement that there always be two trustees serving together. Did the clients make these specific choices after discussing all of the options with their attorney, or did the attorney simply tell the clients that this is the type of estate plan that they should have? Does the client understand why they have a Revocable Living Trust, what a power of appointment is, or why they need to have two trustees instead of just one? Too frequently estate planning attorneys think that they know what is best for all of their clients when in reality each and every client is unique and so their estate plan should be unique.The recommendation:Don't let your estate planning attorney decide all of the details about your estate plan. If the attorney tells you that you must plan your estate in a certain way, then understand why and don't be afraid to ask about other options. This is the only way you will be able to understand your estate plan.4 Tips for Getting Started on Your Estate PlanDo You Need to Hire an Estate Planning Attorney?7 Tips for Finding an Estate Planning Attorney6 Questions to Ask a Prospective Estate Planning AttorneyHow Much Should Your Estate Plan Cost?Estate Planning Myth vs. Reality #4 - Do You Really Need to Understand Your Estate Plan?originally appeared on About.com Wills &Estate Planningon Thursday, November 5th, 2009 at 08:28:03.Permalink| Comment| Email this

Irish Banks Are Smiling - Forbes - October 30, 2009
A white knight came to Ireland's rescue: the European Central Bank, with capital for big commercial banks.

Should You Buy Or Rent? - Forbes - October 30, 2009
Deciding whether to buy a home comes down to your expected returns.

Seven Tips For Buying A Home In This Market - Forbes - October 30, 2009
How to find the best real estate deals.

Is Recession Normal? No - Forbes - October 30, 2009
Multiples are inflated because earnings are depressed. It's that simple.

Why U.S. Doesn't Need More Home-Buyer Perks - Smart Money - October 30, 2009
Hough: Five reasons to look beyond the clamor for an extended tax credit.

Rally Revives, Lifting Most ETFs and Indexes - Smart Money - October 30, 2009
Surprise GDP growth report gets stocks and ETFs surging.

Broker Talk: When the Feds Leave the Building - Smart Money - October 30, 2009
What will happen to interest rates when the government stops intervening?

Stocks Hold Holiday Surge on Merger News - Smart Money - September 29, 2009

News at a Glance

Merger Monday: Deals happen and rumors fly.
More Merkel: German Chancellor wins second term.
Dandy Dow: Poised for best quarter since 1998.
Crude Creaks: Oil dips below $67.

The Lowdown

Stocks closed up sharply Monday after a slew of merger activity and a post-electoral European markets bounce sparked investor enthusiasm.

The Dow Jones Industrial Average climbed 129 points to 9789. The Nasdaq rose 40 to 2131 and the S&P 500 rose 19 to 1063.

Abbott Laboratories (ABT) climbed after it said it will buy the pharmaceutical business of Belgium's Solvay for as much as $7 billion in a deal that would expand its presence in emerging markets.

Johnson & Johnsonsaid it bought 18.1% of Crucell (CRXL) for $442.7 million and will pay development milestones and royalty payments if flu vaccines the two firms will develop make it to the market. Crucell shares rose slightly.

Overseas, Japan's Nikkei 225 Average fell 2.5% as exporters' shares were hurt by the strengthening of the yen against the dollar. In recent trading, the dollar was at 89.48 yen, down from 89.85 yen late Friday in New York. Elsewhere in Asia, China's Shanghai Composite declined 2.7% and Hong Kong's Hang Seng Index shed 2.1%.

But in Europe, stocks were climbing. London's FTSE 100 closed higher by about 1.76% and Germany's DAX was up about 2.8% after Sunday's election in which incumbent Chancellor Angela Merkel's center-right coalition won that country's national elections, setting the stage for tax cuts and labor-market changes.

As of 3:58 p.m., front-month crude-oil futures traded on the Nymex climbed 21 cents to $67.05 a barrel.

Corporate News

News reports in the British press saidKraft Foods(KFT) was readying another hostile bid for U.K. candy maker Cadbury (CBY), reported at $17.6 billion. An initial bid was rejected earlier this month. STORY
Xerox (XRX) struck a deal to buy Affiliated Computer Systems(ACS) for $6.4 billion in cash and stock to bolster its position in outsourcing services. Affiliated provides outsourcing to 1,700 federal, state and local governments, as well as private firms.

Dow Jones Newswires contributed to this report.

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September 28, 2008 (Sunday): Tentative Agreement on Bailout; More Bank Upheaval - Smart Money - September 29, 2009

Tentative Agreement Reached on $700 Billion Bailout

It could cost taxpayers $700 very big ones — as in billions — but many breathe a sigh of relief as the Bush administration and Congressional leaders reach a tentative agreement on a bailout. The deal, which could prove to be the biggest financial rescue in U.S. history, will let the Treasury Department buy $700 billion in debt from companies in trouble. It is described as a necessary intervention to prevent a broad meltdown of the economy. Congressional staffers are expected to pull all-nighters to draft a bill that can be brought to the floor for a vote on Monday. Among the provisions: some pay limits for executives whose firms take aid, and a requirement that the government seek to prevent home foreclosures. (For more on this news, click hereand here.)

Another Bank on the Block

Federal regulators are said to be pushing for Wachovia, the country’s fourth largest bank, to sell itself. Wells Fargo and Citigroup are two potential purchasers, the New York Times reports. If a sale goes through to one of those banks, it would further concentrate the nation’s deposits in the hands of just three institutions — Bank of America, JPMorgan Chase and the bank that acquires Wachovia. Concerns are raised that the concentration would give the banks enormous control over loans and services, the Times reports. But it is expected there will also be stricter regulations. (For more on this news, click here.)

Across the Pond

The global economy gets a little smaller today. Prime Minister Yves Leterme of Belgium and European Central Bank president Jean-Claude Trichet make an unprecedented joint appearance to announce the rescue of Fortis, a Belgian-Dutch financial conglomerate. Fortis is partially nationalized in the rescue, and receives an injection of 11.2 billion Euros from three governments. Meanwhile, Bradford & Bingley, a British bank, is seized by local regulators after no private buyers emerge over the weekend. It becomes the third British bank to collapse this year. (For more on this news, click here.)

Is There Substance to 'Buy on Yom Kippur' Adage? - Smart Money - September 29, 2009

An old tradingadage suggests to "Sell Rosh Hashanah, Buy Yom Kippur” in the belief that stocks often fall in the period between the two Jewish holy days — Rosh Hashanah, the new year (which comes first on the calendar), and Yom Kippur, the holiday when Jews ask God for forgiveness for their sins. Presumably, investors can avoid some losses and buy at a discount, but only after properly atoning on Yom Kippur, which this year ends tonight at sundown.

Like other catchy sayings about the market, this one has a little bit of data to back it up. Following the Yom Kippur strategy between 1971 and 2009 would have worked out to an investor’s advantage in slightly more than half the years, according to data from the Stock Trader's Almanac. So far this year, the market has lost 1.21% since Rosh Hashanah, which ran September 18 to 20 — although that might have more to do with disappointing data on the housing market and durable goods orders than with the Jewish calendar.

Trading axioms typically spring from a mix of psychological theories and actual data, says Paul Frank, a portfolio manager at the ETF Market Opportunity Fund. "Someone would spot the trend and maybe 7 out of 10 years it would work, and then people would jump on it, and it was kind of a self-fulfilling prophecy," Frank says.

Once word gets out, its effect will dissipate if too many people try it at once, says Frank — and the supposed wisdom may not have had much validity to it in the first place. "Patterns appear, but is there a reason behind those patterns, really?" Frank says.

Rally Carries Most ETFs to Higher Finish - Smart Money - September 29, 2009

Market Wrap-Up

Stocks and most exchange traded funds notched sizable gains Monday after a slew of merger activities and a post-electoral bounce in Europe.

The Dow Jones Industrial Average climbed 131 points to 9796. The Nasdaq gained 41 to 2132 and the S&P 500 rose 18 to 1062. Light trading volume and a broad rally ensured that most ETFs not betting against market momentum finished in positive territory.

Abbott Laboratories(ABT) climbed after it said it will buy the pharmaceutical business of Belgium's Solvay(SVYSY) for as much as $7 billion in a deal that would expand its presence in emerging markets.

Johnson & Johnson(JNJ) said it bought 18.1% of Crucell(CRXL) for $442.7 million and will pay development milestones and royalty payments if the flu vaccines the firms plan to develop reach the market. Crucell shares rose slightly.

In Europe, stocks were climbing. London's FTSE 100 was higher by about 1.76% and Germany's DAX was up about 2.8% after Sunday's election, in which incumbent Chancellor Angela Merkel's center-right coalition won that country's national elections, setting the stage for tax cuts and labor-market changes. For a detailed rundown on Monday’s trading session see our market story.

Winners

The broad rally pushed financial services stocks ahead of major indexes and sent shares of the Financial Select Sector SPDR fund(XLF) up 3.4%. The iShares Dow Jones US Financial Sector Index fund(IYF) climbed 2.3%.

Losers

Natural gas prices declined and a new share issue sent the United States Natural Gas fund(UNG) down 1.9%. The iShares S&P U.S. Preferred Stock Index fund(PFF) for corporate debt rated BBB or better slipped 0.4%.

Monday’s Industry Headlines

Launching Pad
The Wall Street Journal reported Mondaythat Swiss commodity supplier Glencore International and Credit Suisse Group have paired up to offer an exchange-traded fund backed by actual aluminum, using the same principles as ETFs backed by silver and gold bullion. The application has been filed with regulatory agencies.

Tuesday’s Notebook

Earnings and Conference Calls
Allscripts-Misys Healthcare Solutions, China Precision Steel, Darden Restaurants, Jabil Circuit, Landec, Micron Technology, Nike, Sealy, SMF Energy, Walgreen, Worthington Industries

Economic Data
7:45 a.m. ICSC-Goldman Store Sales
8:55 a.m. Redbook
9:00 a.m. S&P Case-Shiller Housing Price Index
10:00 a.m. Consumer Confidence
10:00 a.m. State Street Investor Confidence Index

Quick Take

A look at how the industry's most popular ETFs did on Monday.

10 Largest ETFs
Symbol	Net Assets	Price	52 Week High	52 Week Low	Volume
SPY	72,585	106.32	121.17	68.13	117,600,111
EFA	33,471	54.99	60.06	32.16	15,638,876
EEM	30,268	38.58	39.11	19.12	52,264,911
GLD	32,606	97.05	99.92	70.14	7,789,715
IVV	19,814	106.62	121.37	68.24	2,786,854
QQQQ	16,371	42.41	42.66	25.51	84,262,805
IWF	10,219	46.37	50.2	30.49	2,490,401
SHY	7,187	83.93	85	83.07	716,388
VTI	11,880	53.88	60.71	33.75	1,574,815
IWD	8,052	55.94	66.45	34.22	1,708,679

Q &A With Southwest Airlines CEO Gary Kelly - Smart Money - September 29, 2009

With business travelplummeting, consumers demanding deep discounts and oil prices fluctuating wildly, the airline industry is facing one of its worst downturns ever. So when Southwest Airlines (LUV) became one of the few carriers to eke out a profit in the second quarter, you'd think it was time for CEO Gary Kelly to celebrate by tapping that beer vending machine sitting in the corner of his second-floor office.

Not so fast. "The worst is ahead of us," says Kelly, a 23-year veteran of the Dallas-based airline. In Kelly's book, doing less badly than your rivals isn't enough. The low-key executive, who became CEO in 2004 and succeeded chain-smoking, antics-loving cofounder Herb Kelleher as chairman last year, cautioned investors that despite the black ink in the second quarter, he couldn't predict a repeat performance later in the year. That's not to say the 54-year-old executive isn't trying-he's cut the number of planes flying, started service at bigger airports like New York's LaGuardia and Boston's Logan, and charged passengers for priority boarding and for carrying pets on board.

Southwest held up well in past downturns, helped by its low cost structure and knack for savvy long-term planning. But this time around it's had a tougher time: Until last fall it hadn't reported a quarterly loss in 17 years. The firm retains some distinct advantages, like its investment-grade credit rating, modern fleet of Boeing 737s and ability to get planes in and out of the airport faster than rivals. But it also faces new challenges. Other carriers sharply lowered their labor and other expenses during bankruptcy proceedings, slicing into Southwest's long-held cost advantage. To some, the rapidly shifting landscape means Southwest might have to stop trying so hard to be different. They question, for example, its reluctance to follow rivals in charging fees for checking baggage. "Maybe that's not the right way to go," says Helane Becker, analyst at brokerage firm Jesup & Lamont.

For Kelly, who took his first flight on Southwest in 1975, when flight attendants wore hot pants, the challenge is to maneuver through the airline downturn without compromising the carrier's financial strength or its offbeat culture. As Southwest has grown from a scrappy underdog to an airline with more domestic passengers than any other, the flight attendants have traded in their hot pants for khakis. But the quirkiness continues: Take-off instructions are sometimes rapped, and passengers are warned to "keep your tush in the cush" upon landing. We sat down with the sixth-generation Texan in his office outfitted with historical memorabilia from his home state to hear about his plan to get through the turbulence.

A lot of people have talked about "green shoots" signaling economic recovery. Do you see them?

The industry is under tremendous stress. There are absolutely no green shoots. We have to be very prepared for uncertainty and instability, and operate with an abundance of caution.

You've cut about 6 percent of flights this year. How much more is needed?

The question is: What is it going to take to not just survive the recession but maintain our financial position and take care of employees? We will have to continue to trim our flight schedule but at a pace that's not radical, in hopes we can avoid grounding airplanes, furloughing employees and all the bad things that can happen in difficult environments. We'll have to be sure to maintain sufficient levels of cash. We have $2.4 billion and plenty of access to capital markets, and we are going to boost revenue and reduce costs through an early-retirement program.

How do you increase revenue?

Many of the opportunities depend on new technology. We've changed our boarding process, introduced a new fare structure and implemented new technology to manage fares better.

You've held off on baggage charges, much to the dismay of analysts.

Customers hate these fees. Analysts assume you charge the fee and it drops straight to the bottom line. But it's not clear that we'll make more money if we charge than if we don't.

But aren't fliers getting accustomed to these fees?

The potential from charging baggage fees is at most 5 percent of revenue, and it's not a reach to say we are getting that much more from not charging.

Airports are filled with disgruntled passengers. Should there be legislation to ease the frustrations?

I don't accept that. In brand and satisfaction rankings, we were up there with high-end restaurants. Travel is not always perfect; it's about how we deal with those less-than-perfect situations, like delays. Surveys show passengers just want to know if their flight is going to go and at what time. So we stress those things. It's a shame to legislate something that can't be legislated, like weather.

You've been at Southwest 23 years. What is different about this downturn?

I wish steroids were legal, because the speed at which we need to identify issues, study them and make decisions is unlike anything I have experienced before. Anytime you have that many points changing that rapidly, there are bound to be some rough spots. A couple of years ago, we had record earnings, so we were making plans with a lot of comfort. But we've lost our cushion now, so we have to manage our risk much more carefully.

What bothers you?

Generalizations. People think of our low fares, and that implies "cheap." But we have one of the youngest fleets, best compensation packages and have never had furloughs. And some people think all we do is have parties. That's not even close to reality.

Fighting the Downturn
With fewer passengers and volatile oil prices, the airline business faces another deep slump. Southwest's shares are up just 1 percent this year, compared with an 11 percent gain for the S&P 500.
Company	Ticker	Est. 2009 sales	Est. 2009 net loss	Est. 2009 EPS	2009 P/E	Market value
Southwest Airlines	LUV	$10 billion	$47 million	-0.02	NA	$6.5 billion

Overhang of Foreclosures Clouds Housing Market - Smart Money - September 29, 2009

OUR PERIPATETIC PRESIDENTapparently is allergic to Washington. Who can blame him? Getting Congress off its butt and moving even crabwise in almost any direction is slightly more difficult than herding a tangle of snakes. No offense meant to the snakes, who confine their expressions of displeasure to hissing or rattling, unlike our chosen representatives who fill the air with noxious blustery babble.

Mr. Obama, moreover, prefers to voyage abroad; quite understandable, too. He can usually count on adulation from the cheering multitudes in foreign climes who haven't succumbed to rhetorical fatigue — a condition brought on by being exposed to an overdose of oratorical flourish unleavened by substance — that increasingly seems to be afflicting the citizenry here.

As it happened, last week, the president didn't have to travel to the far corners of the earth (unless you are one of those who consider Pittsburgh and particularly New York as far corners of the earth). In a sense, the world came to our fair land (one of the penalties for debasing our currency).

There were not one but two gatherings of global leaders (and laggards; it's often hard to tell the difference): The G-20 bunch, who met in Pittsburgh to fix the world's economies, and the United Nations, which came to New York to mess up the traffic, indulge their logorrhea and take time out from emptying their countries' treasuries to have a high old time.

From what we can tell, the G-20 meeting was a great success; at the end of their somber deliberations, the world's economies weren't noticeably worse off. As for the get-together of the United Nations, it only reinforced our conviction that body should change its name to something more fitting. Like the Indig Nations.

For, as at most of these behemoth bull sessions, elbowing their way into the limelight were the likes of that renowned advocate of democracy, Libya's Moammar Gadhafi, whose rant exceeded the allotted 15 minutes by more than an hour and left his listeners transfixed (or at least in a stupor); Mahmoud Ahmadinejad, Iran's election-rigger par excellence, who graciously cut his rancid remarks to only half an hour, addressing an audience mostly disguised as empty seats, and Venezuela's windbag strongman Hugo Chavez, who had a few words of praise for Mr. Obama (he really knows how to hurt a guy).

We must confess, though, that these get-togethers, especially when they're held on our home grounds, somehow always make us feel better after we've seen the participants close up. For whatever we think of our own political luminaries, they tend to look not half bad compared to most of their foreign counterparts. Or maybe it's that, contrary to the old saw, familiarity actually breeds a little less contempt.

What helped rattle the market last week was evidence that housing, which, when it crashed and burned, badly torched the rest of the economy as well, still faces a long, tough slog in its struggle to reach solid footing. It must really have pained the folks at the National Association of Realtors, who come hell or high water remain congenital optimists (you think it's easy peddling the illusion that every shack's a castle?) to report that sales of existing homes in August were lower.

The decline hurt all the more because the 2.7% drop to a 5.1 million annual rate broke a winning streak stretching back to March (which, perhaps not coincidentally, was when this explosive bear-market rally in equities began). As usual, economists, analysts and assorted camp followers had been confidently predicting a rise in sales. As usual, too, when, instead, sales fell, the economists, analysts et al. lickety-split hurried to point out that one month doesn't necessarily constitute a trend. And it doesn't, although on Wall Street that axiom somehow only applies when the month in question is a bummer.

All of which is preface to sharing with you a decidedly negative take on the outlook for housing by Amherst Securities Group, whose stuff we've quoted before and whose analysis is invariably first-rate. The report, dated last Wednesday, festooned with gory detail, focuses on the swollen overhang, the so-called shadow inventory, that has grown inexorably in the wake of the tsunami of default and foreclosure.

Amherst estimates this massive overhang at seven million units. That's the equivalent of 135% of a full year's existing-home sales and chillingly greater than the 1.27 million units that made up the overhang in early 2005, when the housing bubble had just begun its dizzying and more than a little lunatic ascent.

Put another way, of the 56 million units that the Mortgage Bankers Association says make up the mortgage universe, Amherst gauges 6.94 million units are in what it dubs the "delinquency pipeline" eventually headed for liquidation. And it reckons that another 300,000 mortgages replenish that unwelcome flow every month.

Essentially, then, this shadow inventory represents a massive furtive supply of future foreclosure. Amherst fingers negative equity as keeping the delinquency pipeline heavily stocked. Quite a reasonable assumption, we think. A home owner, saddled with a house that's valued at less than it cost him to buy or that he can reasonably expect to sell it for may lack the will and, more importantly, the wherewithal to keep making payments on his mortgage.

Homeowners' equity has declined from 58.7% back in '05 to around 43% today. What's more, nearly a third of households have no mortgages, which, of course, means that the equity percentage of the 50-plus million that do have mortgage loans is a good cut lower than 43%.

The failure of mortgage modification programs to address negative equity is why Amherst is skeptical that such efforts will be of much help in shrinking that huge shadow inventory. That's a view articulated more than once in this space by Mark Hanson, of Hanson Advisors, who, to his credit, has been quite cautionary about the prevailing bullishness on housing.

Three factors are cited by Amherst as the chief culprits in this sorry narrative. The first is the rapidity with which what it describes as the nonperforming bucket (where the mortgages are at least 60 days delinquent) is filling. The second is the strikingly low "cure rate" on delinquent loans. In 2005, homeowners retrieved 66% of their loans delinquent 60 days or longer. That percentage shriveled to a paltry 5% in the second quarter of '09.

And, finally, bloating the inventory overhang is the lengthening time between delinquency and liquidation. Of the loans in the delinquent pipeline in August 2009, 9% have not made a payment in over 24 months, compared with 4% in 2008. The reasons cited by Amherst for this stretching out include moratoriums on foreclosures and the slow pace of the judicial process in states where a judge's O.K. is required for foreclosure.

We lack the space to offer more than a sketchy précis of the Amherst analysis, which earns high marks for its painstaking explanation of how it reached its less-than- cheerful conclusions. Amherst freely acknowledges that it has emphasized the negative and ignored some positive elements in the housing picture, such as restored housing affordability and the lure of the tax credit for first-time home buyers.

But it reiterates its belief that the humongous overhang is the biggest impediment to a real recovery in housing. And it's deeply concerned that the apparent stabilization "is temporary, based on seasonal factors, and prices can deteriorate further." Any permanent improvement, Amherst contends, isn't in the cards until there's "some resolution of the shadow inventory."

Housing wasn't the only unexpected piece of bad news that gave investors a sudden itch to cash in some of the big gains racked up in the market's wild bull run. Durable-goods orders took their biggest drop last month since January. Here, too, the cockeyed consensus was a good piece off the mark, anticipating a modest uptick (0.5% to be exact). Of particular note is that outlays for nondefense capital goods excluding aircraft were off for the second straight month, rather strongly suggesting that business is no more eager to spend than the consumer.

In the same melancholy vein, now that "cash for clunkers" is no more, the road ahead for auto makers looks a whole lot bumpier. J.D. Powers & Associates, which keeps an educated thumb on the auto biz, glumly estimates September sales will sag to 590,000 units, compared with 1.14 million in August and down 24% from a year-ago. It expects a better showing in the final three months of the year (it's hard to imagine a worse one), but for 2009 as a whole Powers sees sales around 10 million, a three million or so drop from last year's.

The financial sector, despite its return to investor favor, also provided an unwitting reminder that banks and their kin are by no means entirely out of the woods. The Shared National Credit Program, which is a review worked up by the whole regulatory gang — the Fed, the FDIC, the Comptroller of the Currency and the Office of Thrift Supervision — reported (and there wasn't a dry eye among them) that losses from syndicated loans are in the process of tripling this year, to $53 billion, as credit quality of such loans suffered a record deterioration.

The market, while it didn't exactly shrug off these negative items, as it has been wont to do, kept its composure. Losses for the most part were contained, and although declines consistently outweighed advances as the averages gave ground, on Friday at least, a sizable number of stocks bucked the trend.

So far, the retreat seems nothing than a modest pause, while the bulls catch their breath. But we stress the "so far."

Amid Market Highs, More Worries It's a 'Junk' Rally - Smart Money - September 21, 2009

Stocks stretched to 2009highs last week, but market experts remain divided over the sustainability of the rally and the pace of economic recovery. Despite Fed Chairman Ben Bernanke's pronouncement that last year's collapse of Lehman Brothers "sparked a deep global recession, from which we are only now beginning to emerge," the fledgling recovery's health and endurance continues to provoke sharp debate among economists and market strategists.

The terminology is now familiar to even the most economically unschooled reader: "Jobless recovery," "unsustainable rally," "cyclical upturn" and "V-shaped recovery" are the stuff of routine headlines, but the meaning and importance of new data and recent market surges reveals a significant split.

Bulls say we are headed back to growth, while bearish types credit the plethora of government stimulus programs for altering conditions to the point where investors don't know the difference between real growth and a federal spending bubble.

Yardeni Research chief economist Ed Yardeni, once one of the financial commentariat's more bullish voices, reckons it's somewhere in between. The “cash for clunkers” program helped auto and industrial production, and the $8,000 tax credit gave home buying a boost, but neither is a long-term solution. Still, Yardeni told clients Wednesday that stimulus has provided a spark. It won't be a blazing path to growth, but "real GDP growth won’t peter out next year, though it should be lackluster around 2%."

"We’ve managed to muddle along before, and we will probably do it again," he wrote Wednesday. "Besides, we always fret about the sustainability of recoveries, yet they usually do become self-sustaining and don’t require any additional government stimulus programs. In other words, business cycle history suggests that Muddling Along is more likely than Petering Out, in my opinion."

The keenest observers point out that market behavior is linked to economic conditions, but not always in the manner small investors would expect. Gluskin Sheff chief economist and market strategist David Rosenberg looked at the market rally since its March lows, and doesn't see the small investor playing a major role. Never before has the S&P 500 rallied 60% from a low in so short a time frame as six months, he pointed out Thursday. Nor has the index rallied 60% during a period with 2.5 million job losses.

"So who’s doing the buying?" he asked. "Very likely it is still a combination of program trading, short coverings and portfolio managers desperately trying to make up for last year’s epic losses."

That's prompted professional investors bent on keeping their jobs and their hides to continue buying a broad range of rising stocks on momentum, with little option to hold out for fundamental indicators of growth. Barclays Capital quantitative strategist Matthew Rothman wrote Thursday that "we continue to believe that the current rally is largely a 'junk rally' with poor quality outperforming, leading the market higher."

Regardless of whether the recent economic upticks are sustainable, stronger-than-expected or weaker-than-they-look, investors face a stark choice. Satya Pradhuman,a quantitative strategist at Cirrus Research, thinks it's time to sell, as government-rooted stimulus has pushed the market ahead of the recovery, and on Tuesday, wryly noted that "history shows that such optimism portends a heightened risk of disappointment in the coming months and quarters."

But perhaps it's better to be profitable than right, Richard Ross, global technical strategist at Auerbach Grayson, wrote Thursday. "Markets around the world have extended their gains in the face of persistent skepticism and incredulity and appear poised to continue their run. While it may seem counterintuitive, my analysis suggests that the technical backdrop for stocks is actually improving even as prices move higher," he wrote. "The absence of any real selling pressure, lack of unbridled euphoria, recent rotation into higher-quality industrial names and healthy degree of skepticism is the signature of a market which wants to move higher."

In other words, this wave keeps rolling, but investors should watch out for a sudden break and rocky shoals.

How to Invest in Toxic Assets - Smart Money - September 21, 2009

TO JUDGE BY THE PAST 18 MONTHS, the government’s meddling in the markets has produced plenty of ups and downs. But now the feds are serving up a potentially lucrative investment opportunity aimed right at John Q. Public. With a handful of big fund companies, the government is heaping incentives on investors willing to take a flier on some of those gnarly mortgage-backed securities. Make no mistake, says Morningstar analyst Michael Herbst, this is no government handout. Is there money to be made? Maybe. Is it risky? Definitely.

Like all things bailout-related, the Public-Private Investment Program (PPIP, pronounced pee-pip) is part policy, part politics. Its explicit goal is to create a market for mortgage-backed securities, the sliced-and-diced packages of home loans that basically stopped trading when the housing market crashed. Why does the government care? Well, those frozen securities are gumming up the works at the banks that are left holding the bag. If they can’t sell those bonds, they can’t make loans: no mortgages, no commercial loans, no small-business lending. So to entice investors, the government concocted what’s basically a matching grant and chose nine asset managers to participate. For every dollar those managers attract from investors, the government will invest a dollar and lend one more. So if a firm raises $500 million, the government will add $500 million and lend another $500 million. Presto: $1.5 billion to grease the mortgage-backed securities market.

Now the politics. Most experts agree that institutions and millionaires are the obvious investors for a pool of securities that’s risky, illiquid and requires a long holding period. But creating a program with the potential to make more money for the already wealthy won’t play at election time. So the government has encouraged the asset managers to open the door to retail investors. BlackRock has already registered a closed-end fund (a mutual fund with a limited number of shares) that will invest in PPIP assets; other firms are considering creating real estate investment trusts (REITs) to do the same. (The firms declined to comment, citing a quiet period.)

For individual investors, the chance to invest alongside the federal government isn’t a slam dunk, Herbst says. Closed-end funds, like the one BlackRock will offer, don’t always reflect the value of the underlying investments. The securities could lose money, and these kinds of complicated mortgage-backed securities don’t fit easily into a natural allocation of fixed income or alternatives. So if you’re tempted, take a small bite, experts say. Or just take heart-—with the Treasury as a coinvestor, profits should return to the taxpayer eventually.

What NFL Players Can Learn from Steve McNair - About.com - September 21, 2009
About.com guide to beginner's investing, Joshua Kinnon, wrote earlier today, 78% of NFL Players Bankrupt or In Financial Distress Within 2 Years of Retirement.Even though Steve McNair appears to have...

Is the Needle Rising on Natural Gas? - Smart Money - September 11, 2009

In World of Cheap Gas, Williams Hikes Profit Forecasts

Natural gas prices are down nearly 80% from their peak last year, and energy companies are predicting that prices will stay low this winter, which should help homeowners cut their heating bills. But the big natural gas producer Williams Companies(WMB) liftedprofit forecasts today for the remainder of 2009 and said it expects "sharply higher profitability" over the next two years, as prices for energy commodities strengthen. The firm predicts adjusted earnings of 80 cents to $1.90 a share next year, which could easily top Wall Street’s forecast of $1.24 a share. By 2011, Williams expects to be approaching the "record-level earnings" of 2008.

Why the upbeat outlook? Williams seems to be betting that prices for agricultural commodities will improve with a global economic rebound. Natural gas is a big raw material of fertilizer, whose prices have plunged in the recession. But fertilizer prices could start to rise as demand for U.S. crops picks up. Williams is also ramping up its pipelines to tap fast-growing markets for heating fuel. The firm saidyesterday that it has received federal approval to expand its large Transco pipeline, which will connect supplies to markets in the Southeast, where population growth is robust. Williams has also been boosting its reserves — always a good thing for an energy company; domestic and international natural gas and oil reserves had risen to the equivalent of 4.5 trillion cubic feet at the end of 2008, according to the company.

Williams’ stock has taken a beating over the last year, falling 38%. But in the last six months, it’s surged 71%, handily outperforming the broader market. Other gas producers have also soared on hopes that the commodities slump is over and that suppliers are learning to adapt to a world of cheap gas. Williams isn’t the only company seeing higher profits in gas. Chevron(CVX) just signeddeals worth $60 billion to supply liquefied natural gas to Japan and South Korea from a big new joint-venture in Australia.

IN OTHER NEWS:

Central banks in Britain, South Korea and New Zealand left interest rates at record lows today, though analysts said the banks could start tightening in November. LINK
The agriculture market may be stabilizing, but the world's biggest seed company, Monsanto(MON), saidit expects profits to fall next year as the company spends $600 million on cost cuts. LINK
OIl futures are up this morning after reports showed declines in U.S. inventories and OPEC left its output quotas unchanged. LINK

Will National Semiconductor Keep Chip Rally Alive?

Tech stocks have bounced sharply this year as demand for handsets, computers and other gadgetry has recovered. That’s been a boon for chip makers too, with companies like Intel(INTC) recently raisingearnings guidance for their next quarter. Yesterday, Texas Instruments(TXN) reiterated the theme, hikingits own revenue and profit forecasts. Today, National Semiconductor(NSM) is scheduled to release earnings for its 2010 fiscal first quarter and analysts will be looking for similarly upbeat comments to keep the rally alive.

At the very least, National Semi probably won’t have as rough a quarter as the last one, when it swung to its first loss in six years and revenues fell 39% to $280 million. The company has taken some hefty charges to restructure and close factories. But Wall Street now expects the firm to post a profit of 7 cents a share this quarter on revenues of $300 million, and it could get a lift from rising demand for wireless handset and smartphone chips, which constitute about a third of sales, says analyst Romit Shah of Barclays Capital(BCS).

The company could beat forecasts, analysts say, because Wall Street has set a fairly low bar. More Wall Street analysts rate it a hold or sell than a buy and view it as a kind of "show-me" story. That's partly because the firm sells chips to a variety of industries, including medical and automotive companies, which have been slower to recover than the PC and wireless equipment industries. But assuming chip demand continues to recover, the stock looks reasonably priced; it trades at a lower multiple than most of its peers, around 15 times estimated 2010 earnings of $1 a share. The company now has a lower cost structure too, and could see margins improve from higher "utilization rates" at its fabrication plants. "Their business has good momentum," says Shah, one of the few analysts on the Street who recommends the stock.

IN OTHER NEWS:

Home prices could fall by another 25% because of high unemployment, according to banking analyst Meredith Whitney, who says banks are "artificially inflating asset prices." LINK
General Mills(GIS) saidit expects fiscal first-quarter earnings to top the company's internal projections, calling the results a "strong start" to the year. LINK
Corning(GLW) saysit expects output of its liquid-crystal-display glass to be better than its reduced expectations. Corning said third-quarter output would fall less than 5% from the previous quarter, compared with its August estimate of a 5% to 10% drop. LINK

Ending Months of Speculation, GM Set to Unveil Opel Decision Today

Things have been looking up for General Motors in the U.S. lately, where the cash for clunkers program has lifted sales and buyers appear to be coming back to dealerships to kick the tires of new cars. But the big news in Europe is that GM has finally made a decision about its biggest problem child in the region: Opel. The company's board has approved a course of action for Opel and will make an announcement today, according to news reports.

Figuring out what to do with Opel has been a soap opera for GM. Acquired in 1929, Opel is GM’s largest brand in Europe, and many of its cars have been the basis for vehicles in GM’s U.S. lineup, like the Saturn Aura and L-Series. But Opel has been hindered by slumping sales and high production costs in Europe, where it employs 50,000 workers. Germany has taken a keen interest in preserving Opel jobs at its four German factories, and the government has provided loan guarantees to keep Opel afloat. However, although suitors have lined up to buy the troubled unit, GM has gone back and forth over whether it will sell. German chancellor Angela Merkel has said the German government would provide $6.6 billion in aid if GM sells Opel to the auto-parts firm Magna. But other suitors have expressed interest, and GM was reportedly trying to line up financing to keep Opel in-house or sell a stake to a private equity firm, RHJ International.

Whatever Opel’s fate, it faces a tough road back to financial health. Europe’s car market is saturated, and Opel has been losing market share, says Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisberg-Essen. Opel’s sales are "weak and getting weaker," he says. GM could also face a tough time in Russia, one of the region’s fastest-growing markets, if it spurns the Magna deal, which has the backing of a Russian bank. Without Russian sales, Opel would be forced to sell models largely in Europe, "the most competitive car market in the world," Dudenhoeffer says. And without Russia in the mix, it will be tough to generate enough volume to stay profitable.

IN OTHER NEWS:

U.S. house foreclosure filings in August fellless than 1% from July and rose 18% over the same period a year earlier, according to the real-estate research firm RealtyTrac. LINK
Good new for oil companies: the International Energy Agency raised its forecast for global oil demand by nearly 500,000 barrels a day for 2009 and 2010. The agency cited stronger than expected economic growth in North American and Asian markets. LINK
The U.S. employment picture will stay ugly through much of 2010, long after the recession ends, but the worst of the labor crisis is over, according to a survey of 52 private economists. LINK

Is Gold Cheap at $1,000 an Ounce? - Smart Money - September 11, 2009

Even I’ll admitthat gold"feels" high to buy near $1,000 an ounce, only a hair off its all-time-high of $1,030 reached last March. No reason to pay that much, so the thinking goes, better to wait for a substantial decline before adding new exposure.

But referring to the March high as the “all-time-high” fails to take into account that, over time, inflation has eroded the purchasing power of our dollar. Even metals have failed to keep pace, despite their price run-up. To get the actual all-time highs, one must adjust for inflation, which as you can see from the graphs below, using actual Consumer Price Index (CPI) data, suggests most metals are actually at the prices only reached early in this decade -- still quite a ways off from their actual peaks.

To account for inflation since January 1980, gold would have to be trading for more than $2,600 an ounce, almost 175% over today's levels.

Source: Bloomberg, Rosewood Trading

Silver, which has fallen in price more than inflation has increased, would have had to have averaged $39.60 per ounce in August 2009 to have kept up with its January 1980 price adjusted for inflation.

Source: Bloomberg, Rosewood Trading

Regular readers will remember we highlightedplatinum at $850 an ounce as an undervalued asset last December. The metal averaged $1,250 an ounce last month, but it would had to have averaged $3,440 to match its January 1980 price, in real dollars. It’s peak, in nominal terms, since 1980 was $2,040 in May 2008.

Source: Bloomberg, Rosewood Trading

Palladium, integral in the use of catalytic converters and other automotive systems, is now under $300 an ounce, but would have to have averaged close to $770 last month to match its 1980 price in real dollars. Its all-time nominal high of just under $1,040 per ounce was reached in January 2001 as Russian exports were disrupted.

Source: Bloomberg, Rosewood Trading

Legendary speculator Jesse Livermore famously remarked how a stock was never too high to buy or too low to sell. Although precious metal prices might "seem" high now, when viewed through the prism of inflation over time, it’s easy to argue many actually have quite a way to run.

How Regulators Helped Madoff

Does the financial industry need greater regulations? Last month we notedhow government regulation actually perpetuates fraud. Normally suspicious and attentive individuals essentially outsource their own due diligence and investigation to the government.

The Securities and Exchange Commision's own reporton the Madoff Ponzi scheme, released earlier this month, confirms that thesis, as no fewer than 25 investors provided sworn affidavits they chose to maintain their accounts, open accounts or reinvest previous funds with Madoff specifically because the SEC had already investigated and examined him.

Said victim Angelina Sandolo: "[I] moved my investment directly to Bernard L. Madoff Investment Securities relying on the SEC's 1992 statement there was no indication of fraud."

Investor Shirley Stone said, "we gave a big sigh of relief when we read and heard that a government agency called SEC said there was no fraud. Since we were so sure that all was well if our government had checked we went directly into Madoff Investment Co... My generation was taught respect and trust for our government".

My point precisely. Why bother asking questions when “experts” at the SEC gave Madoff a clean bill of health?

Madoff himself would inform potential investors of the SEC's investigations as a means of quelling their fears, saying that it bolstered his firm's credibility that it has passed numerous examinations by the SEC.

Far from a benefit, regulation actually perpetuates further harm by disabling the free market's best watchdog: skeptical, self-interestedinvestors with their own cash on the line.

Parting Shot

Rydex, which pioneered the now burgeoning field of currency exchange-traded funds now aims its sights on the alternative investment space with the launch of GetAlts.com, a primer covering the basics, risks and potential rewards.

Source: GetAlts.com

Why Obama's Speech Is Lifting Health Stocks - Smart Money - September 11, 2009

While it didn't passany legislation, President Obama's nationwide address on health care Wednesday night was a boon to some investors.

The prospects for reform remain uncertain, but investors signaled their own views Thursday by pushing up shares of Wellpoint(WLP), UnitedHealth Group(UNH) and Aetna(AET), the three largest managed care health-insurance providers. Managed-care stocks fell last spring on their decline in profitability and Obama's election. But each company has seen double-digit gains in the last three months as the prospects for a large government insurance program diminished. Obama’s address Wednesday didn’t change investor’s sentiment.

Thursday's stock price moves in managed care show how deeply policy speculation has affected health-care companies, and demonstrate that the market believes that some form of health-care legislation will pass. While pharmaceutical manufacturers, medical device makers and clinical laboratories could also be affected, particularly under a plan championed by Senate Finance Committee Chairman Max Baucus (D., Mont.), the market's been most sensitive on managed-care names.

"Most of the recent fluctuations and variability we have seen – daily moves of 2, 4, even 5% -- have been just on the changing tone of important people out of Washington," Morningstar analyst Matthew Coffina says. "All that volatility has been expanded by speculation around policy."

Whether Obama can exert his will on an increasingly fractious Congress won't be known until Baucus unveils a draft bill, now scheduled for review the week of Sept. 21. Prospects for the bill are far from certain, ISI Group policy analysts Tom Gallagher and Andy Laperriere wrote in a Thursday note.

"Last night President Obama gave a solid speech that we think will likely help his own poll numbers and boost public support for his health-care plan, at least temporarily," they wrote. "It should give the Democrats some momentum in the coming weeks, but we would caution that many of the contentious issues that Obama presented as settled or non-controversial remain tough legislative and political challenges."

But BMO Capital Markets analyst David Shove says the markets now back some kind of reform, and are voting with their wallets.

"The president spoke and the stocks went up," Shove says. "Normally, until recently, when the president has spoken, those stocks went down. Managed care and a lot of health-care names have been trading on [the belief that] reform wins." Coffina says reform talk has acted as a brake, and now that's being released. "Now, on fundamentals, the larger companies are pretty cheap, we think," he says.

Shove says the price-to-earnings multiples of several managed-care stocks could rise from their now-depressed levels once the health-care issue is settled in Congress "[Investors] will go back to the normal three questions: What's the price, what's the cost and how many members are you going to have?" he says.

While managed care pricing is alright, and insurers have adjusted to higher medical costs, the weak economy could soon assert itself on the industry. "Membership is horrible," Shove says. "Because Americans are not working. Also, investment income has dropped. It used to account for about 20% or more of revenue, now it's 10% or lower."

While political deal making continues and Wall Street takes a back seat to Washington, Coffina says investors still have a chance to profit from the health-care debate. "On a valuation basis, based on likely legislative outcomes, we think there's a significant enough margin of safety, especially for UnitedHealth and Wellpoint, that they're cheap enough -- relative to what's likely to happen -- that it's worth the risk."

Afternoon Pickup Boosts ETFs, Stocks - Smart Money - September 11, 2009

Market Wrap-Up

Stocks solidified afternoon gains Thursday after a slow start to trading.

Most exchange-traded funds climbed or stayed put as investors digested President Obama's national health-care address and a better-than-expected report on new jobless claims.

Major indexes saw little early movement, but the Dow Jones Industrial Average closed up 80 points at 9627. The Nasdaq rose 24 to 2084, and the S&P 500 added 11 points to close at 1044.

Initial jobless claims declined 26,000 to 550,000 in the week ended Sept. 5, the Labor Department said. The four-week average of new claims, which aims to smooth volatility in the data, fell by 2,750 to 570,000 from the previous week's revised figure of 572,750. The national unemployment rate last week was pegged at 9.7%.

In an afternoon address to an oversight panel examining the government's financial stabilization efforts, Treasury Secretary Timothy Geithner said government rescue efforts are trailing off, but won't be stopped prematurely.

"The classic errors of economic policy during crises are to act late with insufficient force and then put the brakes on too early. We are not going to repeat those mistakes," Geithner said in testimony before the Congressional Oversight Panel.

For a detailed rundown on Thursday's trading session see our market story.

Winners

The Claymore/MAC Global Solar Energy Index fund(TAN) climbed 4.1% following news that major holding First Solar(FSLR) planned to build a large plant in China. The SPDR S&P Oil & Gas Exploration & Production fund(XOP) rose 3.1% after the International Energy Agency increased energy-demand forecasts and OPEC kept production quotas unchanged.

Losers

The iPath Exchange Traded Notes S&P 500 VIX Short-Term Futures Index(VXX) dipped 4.0% as major indexes took a midsession upward swing. The PowerShares DB US Dollar Index Bullish fund(UUP) slipped 0.3% as rival currencies gained in value.

Friday’s Notebook

Earnings and Conference Calls
Brady Corp., Campbell Soup

Economic Data
8:30 a.m. Import and Export Prices
9:55 a.m. Consumer Sentiment
10:00 a.m. Wholesale Trade
2:00 p.m. Treasury Budget

3 Small Companies With Blazing Sales Growth - Smart Money - September 8, 2009

Earlier this monthI ran a search for companies that have growntheir sales quickly over the past year even as most companies’ sales have declined. I confined the results of that screen to large companies. Below are some small ones that are growing even faster.

The names might not be familiar to readers since all of these companies have stock market values below $1 billion. But each is plenty profitable and recently reported quarterly sales that jumped at least 20% from a year ago.

Health Grades

Market Value: $133 million
Projected sales growth in current fiscal year: 31%

Based in Golden, Colo., tiny Health Grades(HGRD) provides patients with consumer information on doctors, hospitals and nursing homes, complete with ratings from other patients. Visitors to HealthGrades.com can look up basic information on their doctors in exchange for providing their own opinions. (My doc is rated a fine physician with a dreary office and surly staff — spot on.) For $13, they can purchase a more detailed report. Health Grades also receives fees from hospitals for marketing services, which help them to boost admissions of insured patients. For now, hospitals provide more of the company’s sales than patients, but sales from patients are growing much faster. With lawmakers debating broad changes in the way Americans pay for and receive healthcare, any plan short of nationalization would likely benefit from more consumer information. Shares of Health Grades are up more than 80% this year, but their current price of 20 times earnings seems reasonable considering the company’s growth rate.

K12

Market Value: $548 million
Projected sales growth in current fiscal year: 26%

Every child should learn, but not all of them should go to school. Students who learn especially fast or slow might find classrooms boring or frustrating. Sick kids need special care at home. Child actors and entertainers must travel. Headquartered in Herndon, Virginia, K12(LRN) provides online high school courses for home-schooled kids in these situations and others. Parents monitor work closely for kindergarten through eighth grade after which students are expected to develop more independence. In the nearly half of American states that have approved K12’s curriculum and materials for use in online public schools, students can enroll for free. Applications are pending in more states. Worldwide, students can pay to enroll in K12’s own online school. Shares are ambitiously priced at 30 times earnings, but few companies are adding customers in the current recession as quickly as this one.

InterDigital

Market Value: $937 million
Projected sales growth in current fiscal year: 32%

Over the past two months, InterDigital(IDCC) shares have climbed from $23 to $31 and fallen back to below $22. The company licenses technology to cellphone makers that allows for high-speed data transfer, and the stock’s run-up is owed to blazing sales growth. The tumble relates to an International Trade Commission ruling that Nokia has not, as InterDigital had claimed, infringed on its patents. InterDigital is appealing. Analysts say a review of the ruling is likely and that more than 40% of such rulings undergo later revision. A partial win for InterDigital could ban U.S. imports of Nokia “3G” handsets. More likely, Nokia and InterDigital might settle on a licensing deal. Even without such a deal, the stock seems a bargain. The company holds $6 a share in cash and should receive another $3 a share in payments from Samsung next year. Shares are trading at less than 14 times forecast 2009 earnings.

Want Growth? Get Ready for the Slow Lane - Smart Money - September 8, 2009

T. S. Eliot dubbed Aprilthe cruelest month — but some economists and market-watchers say September will be no picnic either.

The early days of the month have already seen the market rally fizzle as many pundits trotted out the conventional wisdom that September is a tough month for stocks. There have been some bright spots as well, but many expect the recovery to be measured in small increments.

Stuart Hoffman, chief economist at PNC Financial Services Group, called Friday's job figures a hangover from the recession, which is just about over but will leave us with lingering effects for some time. Though traders focused more on the good news — the slowing pace of job losses — overall national unemployment hit 9.7%, a level not seen since June 1983.

"The payroll employment survey continues to show signs of 'improvement' as the net monthly job loss for August totaled 216,000 workers; the smallest monthly job loss in a year, but it is still a significant job loss nonetheless," he wrote on Friday.

That's putting the brakes on real recovery, Gluskin Sheff chief economist and strategist David Rosenberg wrote on Friday.

"The fact that 65% of companies are still in the process of cutting their staff loads is quite disturbing — even manufacturing employment fell 63,000 in August, to its lowest level since April 1941, despite the inventory replenishment in the automotive sector and all the excitement over the recent" improvement in the ISM manufacturing index, he said. "Until we see signs of a sustained turnaround in the jobs market, all bets are off over the sustainability of any economic recovery."

That will keep markets choppy, and investors may do themselves a favor sitting on the sidelines now and then, said J.P. Morgan strategist Thomas Lee. In a Thursday note, he took a look at stock performance data for September and found that September selloffs historically do their worst damage in the early part of the month.

"It turns out that if an investor waited until Day 6, the likelihood of realizing positive returns for the month jumps from 44% to 54%. Day 6, as it turns out, is Sept 9," he said. He also said fewer S&P 500 companies have issued negative earnings warnings for the current quarter than any point since 1997, which indicates corporations are at least adjusting to new internal expectations after long periods of cost-cutting.

Steven Charest, market strategist at Divine Capital Markets, wrote on Aug. 31 that the recent rally has more technical than fundamental underpinnings, and while it has probably overheated, that could continue into this month.

"Long term, the secular bear market appears intact," he wrote. "Sentiment however continues to drive the intermediate-term bear market rally to extended levels. While the market rally is extended, third quarter window dressing provides a strong case for price continuing into overbought territory."

It can't continue, but it may not come crashing down all at once, counsels Jeffrey Kleintop, chief market strategist at LPL Financial.

"So much of the news of the recovery is now priced into the market that with the S&P 500 hovering around 1025, the continuing run of better-than-forecast data is having only a limited impact," he wrote on Aug. 31. "The market appears to have become saturated with good news and is beginning to show signs of fatigue after rising 52% above the closing low of March 9, 2009."

Kleintop’s prediction of a period of market consolidation — similar to the S&P 500's two-month stretch around 900, which ran from mid-May to mid-July — doesn’t anticipate sharp moves but rather sees it as part of a larger process of mental readjustment. That could be a long process, cautioned Pimco bond guru Bill Gross in his September Investment Outlook.

The combination of delevering, deglobalization and reregulation "means that if you are a child of the bull market, it’s time to grow up and become a chastened adult; it’s time to recognize that things have changed and that they will continue to change for the next — yes, the next 10 years and maybe even the next 20 years," he wrote. "We are heading into what we call the New Normal, which is a period of time in which economies grow very slowly as opposed to growing like weeds," where profits are relatively static; and where the government plays a significant role in terms of deficits and reregulation and control of the economy.

Most importantly, it promises to be a period in which consumer stop shopping until they drop and begin to start saving — a prudent outlook that takes some getting used to.

Estate Planning Don'ts: #5 - Don't Over Plan Your Estate - About.com - September 8, 2009
This is the fifth in my series of estate planning "don'ts" - lessons that I have learned during my 15 years of practice as an estate planning attorney. Next up...

Are the Bulls Heading Toward a Cliff? - Smart Money - August 31, 2009

Investors' hearty appetitefor any good economic news is filling the stock market with the equivalent of empty calories. Our pundits say that the economy is indeed improving on a slow and incremental basis, but they also warn that the path to stability and the path to growth are getting conflated in a classic bear market rally.

Stocks tailed off a six-day winning streak to sputter at the end of the week, which was marked by an uptick in existing home sales and new housing starts and a decrease in the number of new jobless claims. However, consumer spending showed little upward movement, nationwide unemployment remained at 9.4% for July, and Friday saw the worst reading of the Reuters/University of Michigan survey of consumer sentiment since April.

In short, the recovery will have a long, choppy beginning, said Strategas Research Partners chief economist Don Rissmiller. "There has been a cyclical bounce in productivity, which is normal for the beginning of a recovery," Rissmiller wrote in an Aug. 23 note. "Given enough cost cutting, firms can become profitable for a while. If we're going to see sustained gains, however, investment likely has to pick up considerably."

What's happened in the stock market is an overeager buying spree. It's been encouraged by investors who want positive earnings numbers created by severe cost cuts to serve as a substitute for real growth, and that simply isn't sustainable in the short term.

Morgan Keegan economist Donald Ratajczak raised the question of what happens when the benefits of massive government stimulus plans fade. They've been a factor in many of the positive economic data that's fueled the recent stock rally, from the Cash for Clunkers auto rebate program that ended on Aug. 24 to the homebuyer tax credit incentive set to expire in November.

"While I don't want to discourage investors, about half this full bull run probably already has been completed," Ratajczak wrote in an Aug. 24 note.

For Ed Yardeni, president of Yardeni Research, this recovery drama is familiar -- and it's still in its first act. The economy usually gets out of recessions once inventory liquidation has run its course, he says, after production is cut ahead of declining sales.

"Sales stop declining, and then start rebounding usually in response to stimulative monetary and fiscal policies," Yardeni wrote on Thursday. "During the recession, businesses also slash employment and capital spending. Such cost cutting tends to boost profit margins. It doesn’t take much of a rebound in sales to trigger a revival in corporate profits, which then stimulates a cyclical upswing in business hiring and spending."

John Challenger, CEO of global outplacement firm Challenger, Gray & Christmas, doesn't see the hiring upswing happening tomorrow but said unemployment will decrease as part of a "slow crawl toward economic recovery."

"While it is too soon to expect a massive hiring binge that will move some of the nearly 20 million jobless Americans back onto payrolls, the pace of job cuts is likely to continue its downward trend," Challenger said on Wednesday.

For some longer-term perspective, Gluskin Sheff chief economist David Rosenberg put the recent market surge in context.

"We are now five months in this bear market rally, and up 50% on the S&P 500, and yet the big picture reality is that the S&P 500 is no higher today than it was on February 18, 1998," Rosenberg wrote on Thursday. "Even with this flashy 50% rally and whatever dividend you reinvested, the total return in the S&P 500 since December 1998 is almost, to the second decimal place, 0%."

State Estate &Inheritance Taxes Too - Everyday Estate Planning - August 31, 2009

At the moment, almost all of us don't have to worry about paying federal estate taxes at death. That's because the first $3.5 million of our estates can pass to our heirs tax free. Scheduled to expire in 2010, this limit is likely to be extended by Congress for at least another year and most experts think it is unlikely to be reduced significantly over the next few years.

But here's a new wrinkle--until 2005 most states collected a share of the federal estate taxes collected. But when that 'pick-up' tax expired, they began imposing estate taxes of their own to make up for that lost revenue.

Currently, 16 states and the District of Columbia impose their own separate estates taxes. And several states (Indiana, Iowa, Kentucky, Maryland, Nebraska, New Jersey, Pennsylvania and Tennessee) also impose an inheritance tax. This falls on those who receive the money when someone dies. And, in many instances, the limit for tax-free transfers for both state tax regimes is less than that federal limit. Which means it's possible for an estate to be free of the federal estate tax while being subject to state estate tax or inheritance taxes.

So, for those doing estate planning in these states, make sure to consider the state angle when considering the probable taxes your heir may face.

Value Stocks That Still Work - Forbes - August 26, 2009
A stock seems cheap because a few of its ratios look good, but many times it gets even cheaper. Here's how to spot true value.

Five Cheap Growth Stocks - Forbes - August 26, 2009
We found five firms with shares valued modestly relative to prospects for profit growth.

Back to School: How To Pay For College As An Adult - Forbes - August 26, 2009
Adults can qualify for certain grants and job retraining programs.

Gold Miners Investing For Extended Bull Market - Forbes - August 26, 2009
In a vote of confidence for gold, Barrick and others are investing billions to bring new supplies of gold to market.

The King Crushes It - Forbes - August 26, 2009
He might play second fiddle to a clown in the battle of the burger joint mascots, but today the king celebrates.

Stock Picks: BIG Up; MTW Down - Smart Money - August 26, 2009

Big Lots Offers Big Savings and Big Earnings Beat

Close-out retailer Big Lots(BIG) scored a big earnings beat Tuesday as cost-cutting measures and a cheaper real estate market allowed it to boost its fiscal-year outlook.

The Columbus, Ohio-based company reported earnings of 34 cents a share, up from 32 cents a share a year earlier. Wall Street analysts, on average expected 30 cents a share. Same-store sales dropped 2.4% for the quarter. Nevertheless, Big Lots increased its full-year earnings forecast by seven cents, to a range of $1.92 to $2.02 a share.

Chairman and CEO Steve Fishman said Tuesday that the recession was a challenge even for Big Lots, which discounts merchandise it buys as unsold inventory from other retailers. The chain was operating in "an economic backdrop for the customer that is significantly more challenging than it was a year ago," he said on a conference call.

Wedbush Morgan analyst Joan Storms said in a note Friday that new management was emphasizing "a higher level of accountability throughout store operations, including on store presentation and recovery."

Keith Housum, a real estate analyst at Northcoast Research, said Big Lots was able to negotiate lower lease rates on one-third of its store renewals at the end of last year, helping pare expenses. The remaining leases saw smaller-than-expected increases, he said.

Bottom Line: Hold
Big Lots has done a great job with cost cuts, but the retailer can't point to organic growth. When even a specialty discounter can't boost sales, the recessionary pinch on the consumer can't be overlooked.

Manitowoc Gets Dumped by S&P 500

Shares of Manitowoc(MTW) fell 8% in morning trading Tuesday after the company was removed from the benchmark S&P 500 stock index.

The Manitowoc, Wis.-based company, which is transitioning to a food-service and equipment company from being a primarily heavy-construction-equipment company, was ranked 500th on the stock index compiled by Standard & Poor's.

In a statementMonday, Standard & Poor's said Manitowoc had a market capitalization below $900 million, and would be removed from the index. Manitowoc will be replaced Aug. 31 by CareFusion, a spinoff of S&P 500 component Cardinal Health(CAH).

Manitowoc's shares have been hit by a variety of factors. Among them: The withdrawal of credit and financing for building projects that have taken a toll on the company's crane business and heavy debts from its $2.7 billion acquisition of British kitchen equipment maker Enodis last summer.

"While we expect cyclicality in the crane business, the speed and severity of this downturn have been worse than we have seen in the past," said CEO Glen Tellock last month.

The company's removal from the S&P 500 will force index funds to sell off about 12 to 14 million shares, driving prices down in the near term, Sterne Agee analyst Ben Elias says.

"There's going to be some pressure," he says. "But the reasonable perspective here is – do not refer to it as a crane company. Refer to it as a food-service company."

More than half of future earnings will come from selling food-service equipment, he says, and its crane business should also pick up as construction activity comes off a bottom. "Food service is a pretty stable business," Elias says. "And the decline in crane demand is due to a lack of financing and credit, not a lack of demand for the actual product."

Bottom Line: Buy
This is short-term overselling, creating a bargain price on a company that's smartly moving from girders to burgers.

Burger King Beats Fourth-Quarter Views - Smart Money - August 26, 2009

Burger King Profits Rise But Company Issues Tepid Outlook

Fast food chains have been big hits with cash-strapped consumers, with companies like McDonald’s(MCD) bucking the slowdown in consumer spending. Burger King’s (BKC) sales have also been rising, though not as much as those of McDonald’s. And the company reportedtoday that fiscal fourth-quarter earnings hit 43 cents a share, up from 37 cents a year ago. That beat Wall Street forecasts of 33 cents a share. But the sales trend could be turning for the big burger chain. Sales fell 2% to $630 million. And profit margins were down due to rising commodity costs. The company wasn’t very optimistic about the next fiscal year either, declining to forecast earnings and saying it expects a “challenging consumer environment.”

Burger King's earnings report wasn't a surprise, though, confirming trends already evident with other fast-food companies. Burger King's largest franchisee, Carroll’s Restaurant Group(TAST) had reported similar results, along with rivals like Jack in the Box(JACK). Wedbush Morgan analyst Rachael Rothman said in a note yesterday that she expects same-store sales to be weak in the U.S. and Latin America and forecasts Burger King’s European results taking a hit because McDonald’s has been gaining share in the region. Still, Rothman raised her price target on the stock by $1 to $19 a share, arguing that Burger King shares are undervalued compared to McDonald’s and Yum! Brands(YUM). Burger King recently traded at 12 times estimated fiscal 2010 earnings of $1.55 a share, compared to a multiple of 13 for McDonald's and nearly 15 for Yum! Brands.

Housing Market in Spotlight

Traders have seen signs that the housing market is stabilizing, and housing stocks could see heaving trading today, following a couple reports on house prices due. The Standard & Poor's/Case-Shiller home price index comes out today and analysts expect it to show that prices in 20 large metro areas fell 16.4% for the 12 months ended in June, down from a 17.1% year-over-year decline in May. The Federal Housing Finance Agency's index of June home prices is also due out, along with a report on second-quarter housing prices. Analysts expect the June index to show that prices are stabilizing too. And it presents a broader snapshot of the country than the Case-Shiller index (though it doesn’t include some types of mortgages that aren’t eligible to be bought by Fannie Mae(FNM) or Freddie Mac(FRE)).

Of course, analysts caution that traders shouldn’t read too much into one month’s housing data. The sector is still seeing a rising tide of foreclosures. Banks are grappling with billions in losses on bad loans, and are keeping a tight leash on lending. Although sales of existing homes rose sharply in July, economists say that prices will keep falling as long as foreclosures are on the rise.

Last month, more than 360,000 homeowners were foreclosed, up more than 30% since last year. And lenders are balking at modifying home loans to bail out homeowners under a government modification plan. Also, the average homeowner has lost 15% of the value of his house, and millions of homeowners now have “negative equity,” owing more than their homes are worth. In other words, even if prices show a slight uptick, there are still plenty of headwinds that could keep the housing market down.

IN OTHER NEWS:

The government releases new projections for the federal budget deficit this morning and analysts are forecasting a steep rise in the government's debt. Administration officials have already said they expect another $2 trillion will be added to the government's 10-year deficit forecast, bringing it to around $9 trillion. LINK

President Gives Bernanke Big Vote of Confidence But Traders Shrug

Growth has stalled, unemployment is rising and budget deficits are soaring. Sure, things are a mess. But Federal Reserve Chairman Ben Bernanke looks poised to get another crack at mending the world’s largest economy. President Obama has decided to nominate Bernanke to a second four-year term, according to news reports, with an announcement expected today at 9 a.m. White House chief of staff Rahm Emanuel said the president credits Bernanke for "pulling the economy back from the brink of depression," The Wall Street Journal reported. The full Senate must approve the nomination, but Bernanke is widely expected to make it, though he could face a grilling for some of his policies.

Bernanke has won widespread praise for his rapid-fire efforts to stabilize the economy that drew on every move in the Fed’s playbook. He lowered interest-rates to near 0%; flooded banks with liquidity; oversaw bailouts of financial institutions; and took unorthodox steps like having the Fed buy mortgage-backed securities. As an economics professor, Bernanke wrote extensively about the causes of the Great Depression and the mistakes policy makers made, and he seems determined not to repeat them. He’s also attempted to make Fed policy more transparent and, unlike his predecessor Alan Greenspan, he has reached out to the public to explain his decisions in plain English.

Of course, now that the crisis has ended, Bernanke faces a tricky balancing act. The U.S. economy is showing signs of life thanks to massive government stimulus effort and a highly accommodative monetary policy. The trick will be figuring out how and when to take away the punch bowl. Go too slow on hiking interest rates and tightening the money supply and Bernanke risks soaring inflation and a spiraling U.S. dollar. Go too fast and he risks choking the recovery before it really takes hold. Traders don’t seem surprised that Bernanke is being renominated. Markets in Asia ended the day down and European stocks fell as traders worried that the world could face a double-dip recession after government stimulus programs pull back.

IN OTHER NEWS:

Office-supply retailer Staples(SPLS) reported second-quarter earnings of 16 cents a share, matching Wall Street estimates. Sales rose 9% to $5.5 billion and the company saidit's on track for $300 million in annual savings related to its acquisition of Corporate Express. LINK
Former Fed Chairman Paul Volcker, now an advisor to President Obama, said that money-market funds could be weakening the financial system and should be regulated more like banks. LINK
General Motors may scrap plans for a German bailout of its Opel division and may keep the carmaker in-house, according to news reports Tuesday. LINK

Rally Resilient as Stocks Stay Steady - Smart Money - August 26, 2009

News at a Glance

Bernanke Back: Fed Chair to get new term.
Housing Hopes: Case-Shiller sees smallest drop in 14 months.
Burger Beat: Burger King earnings strong.
Oil Roils: Crude drops below $72 a barrel.

The Lowdown

Stocks moved off their highs but retained some gains Tuesday. While President Obama's nomination of Federal Reserve Board Chairman Ben Bernanke to another four-year term took headlines, investors were also cheered by news that housing prices continued to slow their decline. In afternoon trading, the Dow Jones Industrial Average briefly passed 9600, a 10-month high.

The Dow Jones Industrial Average rose 30 points to close at 9539. The Nasdaq climbed 6 points to 2024 and the S&P 500 closed up 2 to 1028.

The S&P/Case Shiller home-price index for June dropped 15.4%, the lowest decline since April 2008.

The Conference Board reported that U.S. consumer confidence rebounded in August, especially regarding expectations for the economy six months from now. RELEASE

The Bernanke announcement, made Tuesday morning, signals Obama's own vote of confidence to the Princeton economist and scholar of the Great Depression. White House Chief of Staff Rahm Emanuel said the President credits the Fed Chair "for pulling the economy back from the brink of depression," according to news reports. Bernanke must be confirmed by the Senate, which is expected to pass the measure.

"I don't think the market is at all surprised. Why would you switch horses midstream with the expert of the Great Depression and the Japanese lost decade?" said Robert Howe, founder of Hong Kong-based Geomatrix.

Overseas, Chinese Premier Wen Jiabao on Tuesday cautioned against being "blindly optimistic" about the country's economic recovery, saying the boost from short-term policies may fade, while longer-term policies will take some time to have an impact.

On the corporate front, Burger King Holdings (BKC) rose after the fast-food chain topped analyst earnings forecasts.

Overseas, the Shanghai Composite closed 2.6% lower, while Europe stocks nursed slight losses in late morning trade. Oil futures, after hitting a 2009 high on Monday, edged lower, and the dollar index fell slightly.

Oil prices ebbed as stocks moved off their peak. On the Nymex, as of 4:03 p.m. the benchmark front-month October contract for light, sweet crude traded 18 cents at $71.87.

Corporate News

General Motors(GM) was back in the spotlight on reports it was seeking alternatives to German government financing of a takeover of its European-based Opel arm. Germany is reported to favor an Opel buyout led by Canada's Magna International (MGA), while GM's board is more receptive to an offer from investment group RHJ International S/A.
Manitowoc(MTW) fell after being kicked out of the S&P 500.

The Economy

Chain store sales rose 0.6% for the last week, according to the ICSC-Goldman Sachs weekly index. Sales for August are forecast to be down 3.5% to 4.0%. REPORT
The Conference Board's index of consumer confidence increased to 54.1 in August from a revised 47.4 in July, a figure originally reported as 46.6. The latest far exceeded economists' expectations of 47.0.

Does Consumer Confidence Really Matter? - Smart Money - August 26, 2009

So much for thedog days of August. According to the latest consumer confidence data from the Conference Board, consumers are feeling less depressed, thanks to an improved outlook on the economy and, yes, jobs.

This month's reading on consumer sentiment, which surveys folks' feelings about the current and future state of the economy, not only rose, but came in well ahead expectations. The Conference Board said the Consumer Confidence index climbed to 54.1 from 47.4 in July, beating economists' average forecast of 47.5 by a wide margin, according to Thomson Reuters.

Does this mean consumers, the bedrock of the economy who drive 70% of gross domestic product, will start shopping again? Well, don't hold your breath. Any short-term boost in confidence doesn't automatically mean people feel more confident about opening their wallets.

"Consumer confidence tends to track the labor market more closely than any other indicator," says Carl Steidtmann, chief economist and director of Deloitte Research. "We have seen some improvement in unemployment claims, so people aren't as depressed. But the number is still pretty low. We're not suddenly becoming euphoric."

The 54.1 index reading is pretty low -- anything below 90 is indicative of an unhealthy economy. But at least it appears to be headed in the right direction -- and for the right reasons: Consumers are a little less worried about losing their jobs and some are even finding it easier to find work.

From May to July, job losses averaged 331,000 a month, according to the Department of Labor, nearly half the average loss rate from November to April. Thursday's report on initial jobless claims is forecast to come in a 565,000, down from last week's 576,000. Meanwhile, unemployment ticked down to 9.4% in July from 9.5% in June.

As bad as the labor market remains, it appears that consumers are starting to feel the difference. But feeling it and doing something about it are two entirely different things when it comes to consumer spending. Economist expect a slight increase in personal spending figures for July, which are slated to be released on Friday, but say those gains will have little to do with confidence and more to do with a few pockets of strength -- namely the government's "cash for clunkers" program, which temporarily boosted spending on autos.

"You can't use consumer confidence to predict spending from month to month," Brusca says. "And I'm not going to pretend this bounce-back means anything great. But over broad periods consumer confidence is very important to spending. And now it's giving us a little bit better picture."

One recurring problem with consumer confidence surveys like that of the Conference Board or the Reuters/University of Michigan Consumer Sentiment Index due out on Friday is that consumers often say one thing but do another, says Michael Niemira, chief economist and director of research for the International Council of Shopping Centers.

And, right now, consumers are socking cash away. The personal savings rate stood at 4.6% in June -- a drop off from the 6.2% rate reported the previous month-- but still well above the year-ago rate of 3.5%. Meanwhile personal spending tumbled 1.2% in the second quarter.

"It's always hard to line up consumer confidence and spending but it does appear that confidence has been stronger," he says. "What's far more important is to see this improvement continue, because presumably as the economic news gets better, confidence starts to build up."

And eventually those sustained improvements in confidence should get consumers spending again, says Brusca. "The confidence number was all about the rise in expectations," he says. "But it hasn't given us a 'go' sign yet."

Estate Planning Do's: #8 - Review Your Estate Plan Regularly - About.com - August 26, 2009
This is the eighth in my series of estate planning "do's" - lessons that I have learned during my 15 years of practice as an estate planning attorney. Next up...

Washington Passes Physician Assisted Death Bill - Everyday Estate Planning - May 13, 2009

Last week, Washington joined Oregon in passing a state initiative, The Washington State Death with Dignity Act, that permits doctors to assist terminally ill patients in ending their lives by prescribing lethal doses of medication. The bill contains safeguards, modeled after Oregon's 11-year-old assisted suicide law, designed to protect both physicians and their patients.

The campaign was the costliest for a Washington state initiative, with more than $6.5 million raised from individuals and organizations inside and outside Washington state on both sides. The bill will go into effect in March, 2008, and was passed by a margin of 59 to 41 percent.

As a New York Times article summarizes: Patients requesting this assistance must be mentally competent, residents of the state, have six months or less to live according to two physicians, observe a waiting period of 15 days after their initial request and then repeat that request -- both orally and in writing. They must be capable of administering the lethal medication themselves and agree to counseling if their physicians request it. In addition, these patients also must be informed by their health care providers of other feasible alternatives.

You CAN Take it With You! Debts and Death - Everyday Estate Planning - May 13, 2009
As if things aren't hard enough right now, the New York Times reports this week that collection agencies are now working to collect debts owed by the dead. They're banking on the fact (no pun intended) that most people don't know that they AREN'T personally liable for these debts all. Jeez, how low can you get?

Specially trained agents are calling the heirs of the recently departed and politely asking them to pay up the outstanding balances on credit card debt, car loans, and the like. If an estate is filing an official probate proceeding, creditors have a process for filing claims against the decedent's property. But that's not who these collection agents are calling.

They're calling the relatives of people who have died who aren't in formal probate proceedings either because they had created living trusts during their lifetime or because the estate was too small for a probate proceeding.

Here's my advice: No matter how nice these people are (or well-trained), simply ask them why they think that you're legally responsible for the debt. In the vast majority of cases, you aren't obligated to pay them a nickel. It's true that married people can be jointly liable for debts, and creditors can try and get repaid from the property you've inherited from the decedent depending on your state's laws -- but that's their problem, not yours.

In fact, most estate planning attorneys can successfully get credit card companies and the like to accept a fraction of the outstanding balance on those debts that the survivors are responsible for, because these companies know just how hard it really is to collect anything on the dead's debts.

More Bad Real Estate News: People Selling Burial Plots at a Steep Discount - Everyday Estate Planning - May 13, 2009

Just when you thought the news couldn't get much worse with respect to property values, the AP reports that there's a big uptick in the market for burial plots. People are selling their eternal resting places to pay for food and shelter in the here and now -- but so many are flooding the market that prices are way down. Yikes.

One plot broker (who knew there was even such a job description?) reported that he was doing 9 or 10 times as much business as usual. The laws of supply and demand, however, seem to be holding true with depressing vigor. He also reported that one woman purchased a plot for $500 that had originally been sold for $6,800.

Obama Plans To Freeze Estate Tax Credit at Current Level - Everyday Estate Planning - May 13, 2009

The Wall Street Journal reported this week that President-elect Obama wants to freeze the estate tax credit at its current level. This means that estates with less than $3.5 million in value can be transferred free of the estate tax at death. In other words, the vast majority of us (98%) won't have to worry that our children's inheritance will be reduced by a 45% tax when we die. Of course, the majority of us are actually more worried about HAVING an inheritance to pass along to our children some day, but that's a different story.

Obama's proposal also means that the total repeal of the estate tax, which would have meant that even the very rich could have passed their entire estates free of estate tax at death, will not occur in 2010 as planned. It also means the estate tax credit won't reset to Clinton-era levels of $1 million dollars and a 55% tax rate in 2011, which is when the current legislation, passed as part of the 2001 Bush tax cuts, was scheduled to expire.

The WSJ reports that the Senate Finance Committee will move within weeks on legislation to reverse that law, and Mr. Obama is expected to detail his estate-tax preservation proposal in his budget next month.

Between a Rock and A Hard Spot: Trustees and the Falling Real Estate Market - Everyday Estate Planning - May 13, 2009

house for sale.jpg

The trustees of a living trust have a tough job after a death. They have a duty to the beneficiaries of that trust to invest and manage the trust's assets prudently and to distribute them as directed by the trust document.

But what do you do if the trust's main asset is the deceased's house? What do you do if you have to sell the house and nobody's buying? And what if the market just keeps getting worse as time goes on?

There's no easy answer here. As a trustee, you have a duty to get the best price that you can, but it's not your fault if the bottom's fallen out of the market. The longer you wait, the less you might get, so sitting on the house isn't a realistic solution. The beneficiaries are eager to get their inheritance and they don't want you to wait either. So, sell you must. But be smart about it. Expect trouble from disappointed heirs; make them your allies (if you can) to head off any rumblings that somehow they could have done better.

What you need to do is to communicate with the beneficiaries and keep them in the loop in terms of what you're doing to get the best price. Formally notifying them of any offers you intend to accept, or the price you're asking on the market, is one way to protect yourself -- such formal notification gives the beneficiaries a limited period of time to object to what you're planning to do. Find out if your state provides this -- it's often called a "Notice of Proposed Action."

And of course, keep really good records of what you're doing. If the beneficiaries ask for these, provide them (if they sue you, you'll have to produce these records anyway, after all).

Nasty Will Fight Over Last Minute Gifts to Mistress - Everyday Estate Planning - May 13, 2009

Us estate planners often hear from unhappy beneficiaries after there's been a death -- especially when they are surprised by last minute changes that give large assets to people other than themselves. Here's one for the record books.

A nasty will fight in Georgia is on its way to that state's Supreme Court for the second time. Deceased millionaire Harvey Strother made a will in 1988 that left the bulk of his fortune to his wife and children. But in 2000 and 2003 he made changes to the will that left choice pieces of real estate to his mistress, Anne Melican.

One amendment gave Melican, his mistress of seven years, a monthly allowance of $7,900, and a second gave her a Marco Island, FL, condominium and health insurance. A third gave her a condo in Cape Cod, MA, a Florida boat slip and a Florida property for her son.

Strother's family, represented by former Governor Roy Barnes, argues that Strother was incapacitated by alcohol at the end of his life and that he was conned into making the gifts. At the trial, a friend testified that when he saw Strother in December 2003 -- shortly after he made the final changes to his will -- he was drunk, wearing a diaper, and filling a 16-ounce plastic cup from a box of wine.

The Melican side argues that "no one could control Strother, not even his closest relatives."

Both sides are appealing a jury verdict that found for Melican on two of the gifts and for the Strother family on the other.

Let this be a cautionary tale to all of us: Do what you want with your last will and testatment. But if you're going to surprise your family, work with your attorney to do it properly (and don't run around town with boxes of wine).

Proposed Estate Tax Break for the Very Rich - Everyday Estate Planning - May 13, 2009

Leave it to theU.S. Senate. At a time when most of us are worried about keeping a roof over our heads and paying the essential bills, here comes a proposal from two Senators to -- get this -- lower the estate tax for couples with more than $10 million dollars!

In a move that will benefit the top .2% of U.S. taxpayers, Senators Kyl (R-AZ) and Lincoln (D-AK) are proposing to raise the current estate tax exemption from $3.5 million per person ($7 million per couple) to $5 million per person ($10 million per couple) and to lower the maximum tax rate from 45% to 35%. Estimated to cost the U.S. Treasury as much as $250 billion over the next 10 years, this move is also likely to reduce the amount of planned giving by the very wealthy since such giving is often done, in part, to reduce the estate tax burden in wealthy families.

The Obama Administration has proposed instead to freeze the estate tax exemption at its current level when the Bush Administration tax bill expires in 2011.

Preserving Your Online Life (and All Those Annoying Passwords) - Everyday Estate Planning - May 13, 2009

I love it when computers help solve problems that they've created! When Quicken first came out, it solved the problem of how to keep track of all those new ATM receipts and still balance your checkbook. (I'm old -- this was in the dark ages BEFORE online banking, if you can believe it.)

Now, Legacy Locker comes along -- a startup designed to make it easy to pass along your digital treasures (like photos, correspondence, and videos) to your loved ones at death. For $29.99/year or $299.99/for life, you can set up your very own "digital will".

The service makes it easy to pass on your log-in credentials for such things as your email or PayPal account at your death, making it possible for your family to gain access to these digital remains of yours without a court order. It also allows you to write Legacy Letters, personal notes that will be sent to the intended beneficiary in the event of your death.

Interested? There's a free trial account available for those who want to give it a try, limited to 1 beneficiary and 3 digital assets (login info for any website, email, or other online site).

Sounds great. I just wish I could use it to keep track of my digital life BEFORE death.

Parents Denied Use of Deceased Son's Frozen Sperm - Everyday Estate Planning - May 13, 2009
In the first case of its kind to be decided, a New York appeals court has denied the right of parents of a deceased son to use his frozen sperm to create a grandchild. In 1997, the son deposited sperm at a tissue bank. He had been diagnosed with cancer and wanted to ensure his ability to create children if he survived the diagnosis. He signed an agreement with the lab asking them to destroy the sperm in the event of his death. He died six months later.

While going through his possessions, his parents discovered that there was a sperm deposit and asked the lab to continue to preserve it while they fought for the legal right to use the sperm to create a grandchild.

The New York courts have denied their claim to either ownership of the sperm or for permission to use the sperm. Their reasoning? New York law requires certain screening tests be done before sperm can be donated for public use, and such tests are impossible to conduct at this point.

Powers of Attorney: Another Sad Tale - Everyday Estate Planning - May 13, 2009

The Seattle Times reports today that a man stands accused of systematically draining his 93-year old mother's bank accounts, racking up charges on her credit card, and mortgaging her paid-off condo. All after his mother had had been hospitalized following a stroke.

While she was in a nursing home, he was, the prosecutors allege, spending her money on trips to casinos, country clubs, tanning salons and his own health insurance, while leaving her nursing home bills undpaid.

How did he pull this off? Simple, she'd named him as her agent under a durable power of attorney the week before her stroke. With it he was supposed to be making sure that she was well-taken care of. But because that document gave him access to all of her accounts and no one was watching how he used that authority until her unpaid nursing home bill was $37,000, he was able to, or rather stands accused of being able to, use that money for himself instead.

And the moral to this sad story? Be careful who you name to act on your behalf in the event of your incapacity. You really are giving that person a blank check.

Life Insurance: Big Bang for your Estate Planning Buck - Everyday Estate Planning - May 13, 2009
Before I had kids I thought that life insurance was a boring thing that only other people had to think about. But I was wrong about that. Turns out that life insurance is actually one of those old-fashioned financial products that makes a ton of sense. (Believe it or not, some of them actually do.)

Of course, there are lots of complicated life insurance products out there, too, but for estate planning purposes term insurance makes the most sense.

Here's how it works: you sign a contract with a life insurance company. You agree to pay them a monthly premium; they agree to pay your beneficiaries a certain amount if you die during the term of the contract. That way, if you get hit by a bus unexpectedly your loved ones will be well taken care of.

A twenty-year term policy is perfect for families with young children. You'll lock in a low premium rate for the entire twenty years. And in these days of job insecurity having a policy outside of whatever your employer offers is a good idea -- even if you do get laid off you'll still have a policy to provide your family with financial security.

And term insurance is surprisingly inexpensive. The insurance company is betting that you're likely to survive the term of the policy, so their premiums are generally lower than insurance that lasts your entire life (which is sure to be paid out in the end). The younger you are, the less it will cost so don't put it off for better times.

The New York Times just published a great overview of insurance that you can read to learn more. The Motley Fool has a lot of helpful calculators to help you figure out how much to buy. And to compare rates online term4sale.com makes it easy to type in your zip code, age, and health history to get an idea of what it will cost.

Ms. Astor Regrets-It Can Happen in the Best of Families - Everyday Estate Planning - May 13, 2009

This week in New York a trial opened in which, Anthony Marshall, the son of famous socialite Brooke Astor, who died in 2007 at the age of 105, stands accused of exploiting his mother's diminished capacity to steal cash and property worth $198 million dollars.

The prosecution claims that Marshall, and codefendant (and attorney) Francis X. Morrissey, had Ms. Astor sign papers and make changes to her will that increased Marshall's share of his mother's estate. In addition, Marshall stands accused of paying himself $500,000 a year as Astor's financial advisor and transferring her property to himself.

The case was prompted, the Washington Post reports, by a court petition filed by Philip Marshall, Astor's grandson. The petition alleged that his father was robbing Astor and "neglecting her health and hygiene."

What can the rest of us learn from this mess? First, family members should pay close attention to their elders and make sure that they are comfortable, safe, and well-taken care of. Second, family members should carefully scrutinize the financial well-being of the elderly and question any suspicious transactions or property transfers.

If you suspect that someone is taking advantage of an elderly family member, find out how they've gained access to that person's finances. If your elder still has capacity (the ability to understand what they're signing) they can make a responsible person their agent for finance using a durable power of attorney. The agent can then block the evil-doer's access to the money. If an elderly person no longer has mental capacity, you'll have to go to court and petition to be named that person's legal conservator or adult guardian to protect their finances.

Sad Day in Dogtown: Dogs Get $1 Million; Charities Get $136 Million - Everyday Estate Planning - May 13, 2009

Animal rights advocates were thrilled last year when real estate mogul Leona Helmsley's will left the bulk of her fortune to a charity, the Leona M. and Harry B. Helmsley Charitable Trust, whose mission statement was to make expenditures for "purposes related to the provision of care for dogs."

But a New York judge ruled in February that the trustees for the Leona M. and Harry B. Helmsley Charitable Trust had the sole authority to decide which charities should benefit from her estate.

And today they've announced 53 charitable grants, the bulk of which went to New York City hospitals and medical research centers. $1 million was divided equally among 10 animal rights charities, including the American Society for the Prevention of Cruelty to Animals and several groups that train guide dogs for the blind.

What to Do When You Move - Everyday Estate Planning - May 13, 2009

moving van.jpg People often ask me what to do with their estate plans when they move to another state. Here's the answer: if you think you're going to be in that new state for awhile, it makes sense to update your estate plan to reflect that state's laws.

It's not that your estate plan will be invalid in another state. With the exception of gay marriage (in some states) contracts signed in one state are valid in another. But it can create inconvenience for your heirs if they have to administer an estate under, say, California law, if a parent died while a resident of Georgia--especially if the kids live in Georgia too.

Also, powers of attorney, which are important legal documents granting another person the right to act on your behalf with respect to property and health care, are created by state law and rights, especially with respect to health care decisions, vary from state to state. For that, and because banks and doctors like working with forms that they know, it's a good idea to at least create new powers of attorney if you move to a new state.