20. February 2010 by Dan Walkow, CFA, CMT.

US health insurers across the country are dramatically increasing rates and slashing benefits for many of the estimated 17 million consumers with individual insurance policies, while making it almost impossible to obtain affordable alternatives.

The cost of health insurance has gone up as much as 39%,

“Millions of Americans are in the least secure marketplace . . . the one in which people have virtually no options,” Sebelius said. “Their only choice is to pay increases or drop the coverage.”

More daunting is the prospect of millions more workers being forced to buy individual policies as employers look to further slash or eliminate company-paid group health benefits.

The Canadian health care system with all its warts continues to serve Canadians well. Most Canadians have no idea of the pain and financial anguish many Americans face in regards to health-care.

Read more at the LA Times here.

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18. February 2010 by Dan Walkow, CFA, CMT.

Its called tracking error. Tracking error is any deviation (positive or negative) from the return of a fund’s benchmark index. Viewed through this lens, investors should always expect some tracking error in their funds, as the drag of expenses will cause most ETFs to lag their benchmarks over time.

Morgan Stanley attributed the increase in tracking error to many factors, read more here.

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18. February 2010 by Dan Walkow, CFA, CMT.

More companies are trying to calculate the cost but do not and the reason  companies cite for having not calculated the total cost? Complexity.

There are several cost factors to an 401K Plan that may have a bearing on whether you should contibute the maximum or the minimum required for comany matched funding.

Check it out here.

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15. February 2010 by Dan Walkow, CFA, CMT.

Chalk it up to political gridlock. For the first time since 1916 there is no estate tax in force in the United States.

Amid all the wrangling and finger-pointing about the budget, government spending and taxes, Congress — under the Democrats’ control, no less — is right now, very quietly, passing the biggest tax break for billionaires in history.

Read more here.

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31. January 2010 by Dan Walkow, CFA, CMT.

Former US Fed Chairman, Paul Volcker speaks out on reforming the banking systems. It is time!

PRESIDENT OBAMA 10 days ago set out one important element in the needed structural reform of the financial system. No one can reasonably contest the need for such reform, in the United States and in other countries as well. We have after all a system that broke down in the most serious crisis in 75 years. The cost has been enormous in terms of unemployment and lost production. The repercussions have been international. Read the whole thing here.

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29. January 2010 by Dan Walkow, CFA, CMT.

Following on China’s lead the Central Bank of India is tigthening monetary policy and has indicated that there is more to come. As the old adage goes ” Don’t fight the FED”, of China and India that is.

Tighthing monetary policies such as raising bank reserve requirements and raising interest rates are tools Central banks use to slow down the economy and arrest inflationary pressures. Tends not to bode well for both equity and bond markets.

See the story here.

Posted in Investing, Economics, Fixed Income | No Comments »

25. January 2010 by Dan Walkow, CFA, CMT.

Japan, the world’s second-biggest equity market, is up 3.7 percent this year as measured by the Topix index, the most among the world’s 10 largest economies. Overseas investors pumped almost $13 billion into Japan during the two weeks ended Jan. 15, the most since 2004. Companies trade for an average 1.2 times book value, almost half the valuation for the Standard & Poor’s 500 Index, according to data compiled by Bloomberg.

Thats cheap but key drive will be earnings growth, I am of the opinion that the likes of Sony, Pansonic and Canon may just be shining stars in 2010. Read more at Bloomberg here.

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19. January 2010 by Dan Walkow, CFA, CMT.

China has rattled financial markets by moving faster than expected to tighten its grip on liquidity as a strong recovery and rising asset prices threaten to cause overheating in the world’s third-largest economy.

Societe Generale said in a research note in the wake of Tuesday’s auction that the central bank’s wording of “flexible and targetted” was currently still tightening.

“The hike in the reserve requirement and the draining of liquidity while in fashion with the notion of flexibility and targetting, cannot be dismissed as anything other than tightening no matter how minor at this stage,” SG said.

China is leading again, this time putting the brakes on by raising interest rates and tightening bank reserve requirements to arrest runaway stock market and real estate speculation. Will the rest of the world follow?

Read  More here.

Posted in Inflation, Economics | No Comments »

18. January 2010 by Dan Walkow, CFA, CMT.

Noted economist and author Richard Duncan said that, faced with sluggish global growth and a tapped out U.S. consumer, there’s little hope that China can keep its factory-geared economy in motion much longer.

“China has followed an export-led growth model for the last 25 years, and it has just hit a brick wall when the U.S. economy went into crisis,” Bangkok-based Duncan said in an interview with MarketWatch.

Duncan is the former London-based head of global investment strategy at ABN Amro. In 2003 he authored “The Dollar Crisis,” which warned that imbalances in global trade would lead to a meltdown of the financial system.

See the full story here.

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17. January 2010 by Dan Walkow, CFA, CMT.

What are we smoking, and when will we stop?

A nationwide survey last year found that investors expect the U.S. stock market to return an annual average of 13.7% over the next 10 years.

Robert Veres, editor of the Inside Information financial-planning newsletter, recently asked his subscribers to estimate long-term future stock returns after inflation, expenses and taxes, what I call a “net-net-net” return. Several dozen leading financial advisers responded. Although some didn’t subtract taxes, the average answer was 6%. A few went as high as 9%.

We all should be so lucky. Historically, inflation has eaten away three percentage points of return a year. Investment expenses and taxes each have cut returns by roughly one to two percentage points a year. All told, those costs reduce annual returns by five to seven points.

So, in order to earn 6% for clients after inflation, fees and taxes, these financial planners will somehow have to pick investments that generate 11% or 13% a year before costs. Where will they find such huge gains? Since 1926, according to Ibbotson Associates, U.S. stocks have earned an annual average of 9.8%. Their long-term, net-net-net return is under 4%.

Read this excellent article at the Wall Street Journal Online. (subscription)

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