How to Register Your Business
Have you ever wondered how businesses register their names? You can now check a name online for possible use as a business name. The New Jersey State Business Gateway Service has a free online search feature here. Checking Google is also a recommended site to get an understanding of similar names to ones you like. The IRS does not accept punctuation in the title of a business of any kind, including apostrophes, except a dash (-). Asking an attorney to check a prospective name is also a good idea.
It's important to register the name of a new business to get a national or federal tax ID number and pay taxes. This exact situation happened to me last week as I registered the name of my new business. Your banker can help you set up a sole proprietorship, and draw up papers for Limited Partnerships and more complicated businesses.
An article in today's Wall Street Journal happens to address this very topic of choosing business names and the legal problems that can arise if names are repeated or even close to another name. Many big businesses monitor the market to be sure their names aren't misused around the world as well. Perhaps McDonald Corp.'s hounding of the "McDonald Castle" owners in Scotland was going a bit too far in the direction of reputation management.
Watch Out For Flaming Tornadoes!
These must be exogenous shocks; any one of which, if true, could conceivably affect stocks and real estate investments:
dailykos.com
* Flaming tornado: On rare occasion, the wind can whip fire into a whirl as strong as a tornado. A storm of such twisters killed 38,000 people in Tokyo in 1923.
* Poisonous cloud: In 1986 in Cameroon, 1,700 people and 3,500 animals mysteriously dropped dead simultaneously. Scientists discovered that a nearby lake had absorbed carbon dioxide from the dormant volcano beneath it, and then spewed out a 16-mile cloud of death that moved at 125mph.
* Asteroid strike: Astronomers believe a 220 million-pound asteroid hit the earth's atmosphere over Siberia in 1908, producing an impact equal to 185 atomic bombs, and felling 80 million trees—but killing no one, because the area was so remote.
* Snake attack: Days before Mount Pelee blew in the Caribbean in 1902, hordes of poisonous snakes, sensing the coming eruption, poured into the streets, biting and killing at least 50 people.
Christina Romer's Optimistic Presentation: "Back to a Better Normal"
The Cold Heart of America: Are American Banks Global? Iff They Convert Currency As A Service
Janet Tavakoli
Alone with my sixteen-year-old, we were extremely lucky traffic was light. I got out and stopped all traffic, just by waving my arms myself on the Pennsylvania Turnpike and told her to stand beside the road. It was in elevated mountain terrain, and the highway itself was elevated fifty feet. There was nowhere to go, no houses, police or plows to help us out. I would love to be able to thank the Good Samaritan who drove my SUV to the side of the road while I slowly stopped Turnpike traffic all by myself. It all took fewer than ten minutes and then we were off again. My recently-tuned Lexus RX350 SUV had only 17,000 miles on it. I guess I shouldn't have pumped those brakes when we slid.
The good news is, at least not all Americans are as cold-hearted as they appear to be in the banks when you just want to change a few dollars.
Managing the Unknowns in a Time of Uncertainty
M. El-Erian Photo: CNN
I like the way Mohamed El-Erian, CEO and CIO of PIMCO, on CNBC just now, talked about the need to second-guess in business, because of the "known-unknowns" and the "unknown-unknowns" as he called them.
Most of life is uncertain, and the need to manage uncertainty will always rule our lives, both business and personal.
(As it did the Fedex driver who was just stuck in the snow in our driveway for over an hour.)
The LIMB Method of Choosing Mutual Funds
I have been revisiting the year's top gainers list for a future post, and have looked again at the "CANSLIM" method for stocks invented by William O'Neill, founder of Investor's Business Daily newspaper and author of investment guidebooks, just for mental exercise. I always get somewhat confused and tied up in knots worrying about stocks, so funds are relaxing for me to look at. As far as mutual funds are concerned, the "LIM" are more important than the "CANS" in my view. (This is something I decided myself, and it really simplifies the process of choosing mutual funds.)
L - Leaders vs. Laggards. Choose leading mutual funds. The leadership of previous mutual fund success is easily found in fund charts (e.g. bigcharts.com) by checking longer time horizons. The bigger vista tells you more with mutual funds, as John Bogle says. This also tells you how they have fared in the most recent bubbles, and helps you invest based on how much you can afford to lose. The less you can afford to lose, the more conservatively you must invest. The younger you are, the more risks you can take with some of your money.
I - Institutional Support. Again, choose leading mutual fund companies, because they mostly are the institutional support and some have lower fees than others. Easy.
M - Market Direction. Not so easy. In fact, this is the hardest. You want a fund heading up, right? This is why Bogleheads stay in funds and won't move out. Don't get me wrong, I like Vanguard et al. But funds tend to move up and down slowly, with some exceptions giving you time to think about your moves. Certainly, it's normal to change mutual fund lanes more slowly, SUV style, than to day-trade stocks lightning fast, because diversification and staying in the market are constant themes for good reason. The idea is to put money to work at all times, if possible, and choose carefully based on "your risk tolerance."
B - Beta. Beta is the financial term for volatility. 1(One) is the baseline for mutual funds, and the more risky, the farther away from 1 the beta is. It's a factor to compare when choosing mutual funds, especially sector and commodity funds as these move fastest.
L and M especially are the most important criteria for choosing leading mutual funds because they're all we have to go on. Even Jim Simons, the legendary hedge fund owner, says he chooses stocks based on past performance because it's all the information he has. Of course, for legal reasons, stocks and funds constantly have the "beware" sign up.
Even though most of us aren't full-time day traders, there's still plenty of opportunity to do well in the market. We have lives. Full lives. With computers, we don't have to make charts by hand laboriously as we certainly used to have to do.
It's possible to invest in tax-exempt mutual funds and make off well all by yourself without spending hours and hours on it with the help of your quick online research. Morningstar.com and Fidelity.com are some online resources to check because you can compare funds and their fees (lower is usually better). You may want to spend hours depending on the size of your portfolio, but you don't have to. You can choose a mutual fund based on incomplete knowledge of a fund, and that's all right, just as you won't ever know everything about a company if you buy its stock. For most consumers of mutual funds, fund leadership and market direction are key. Like children, vigilance is everything, but less so with mutual funds than stocks.
To summarize: funds are a lot easier to manage for the average investor than stocks for the following reasons,
(L) leadership - previous fund success
(I) institutional support - lower fees
(M) market chart direction and
(B) beta or volatility.
The point is that buying anything is a whim, including investments, necessities and groceries. Sorry if this is too basic, but there are thousands of stocks and funds to buy and it's a buyer's market. I can't help giving my two cents for what it's worth.
How Fast is America?
By nature I am optimistic, and it worries me that "too big to fail" American company officials are getting government bailouts excessive enough to allow the usual comfortable fancy travel junkets and bonuses. At the same time, "too small to survive" companies, despite many being deserving, are being eaten alive for lunch by shorting day traders ganging up online with impunity.
The government has drawn a line in favor of big business while sending thousands of its best former students to invade a far-away country in wintertime. After the Second World War, returning troops created the largest post-war boom the country has ever had and didn't sit around doing nothing as expected according to this book. America continues to believe it can afford everything but healthcare for all and helping American small businesses.
Glad to see that averages went up in November on American exchanges, despite the fact that I spent most of it writing my novel, keeping an eye on the market, as usual, though not positively glued.
Here's a good speed test website called 10-fast-fingers.com that tests your typing speed and lets you practice and improve your score. It's like playing a game against yourself and includes simple English words. Other languages are possible on this test, too. I found it fun, and got 85 words per minute to my surprise, with 0 errors. If only I were that way in real life and with my investing!
National Novel Writing Month
Ben Franklin:"The Art of Making Money Plenty in Every Man's Pocket"
Forbes: Billionaire Similarities
Many of them :
1) Had an important early failure that they learned from.
2) Had parents with math-related careers.
3) 15% didn't finish college. Of course this means that 85% did finish college, and the others, such as Bill Gates had superior social advantages and earlier schooling.
4) Received MBAs from top-tier colleges. At least MBAs don't hurt.
5) Had September birthdays.
6) Worked awhile at Goldman Sachs.
7) Were members of Yale's Skull & Bones Club.
Few of us have September birthdays or were members of Yale University (and a former boys' club). Few of those who made their own billions had dark skin or were female, I notice. Oprah Winfrey, a notable exception, powered past many of the white male majority of billionaires.
Oprah Winfrey
Obviously, these billionaires are more different than alike. The world is changing, and the future has yet to be written. Let's see more diversity. That list should include more women, too, more than one half of the world's population.
Famous Investment Quotations
October: This is one of the peculiarly dangerous months to speculate in stocks in. The others are July, January, September, April, November, May, March, June, December, August and February. -Mark Twain
Keynes:The market can stay irrational longer than you can stay solvent.
Buffett:You only find out who is swimming naked when the tide goes out. – (many more from Buffett here)
From Poor Richard’s Almanac, Benjamin Franklin, 1735-47:
- A fool and his money are soon parted….
- Poverty wants some things, Luxury many things, Avarice all things….
- Beware of little Expenses, a small Leak will sink a great Ship.
A bull is someone who believes the stock market will go up and a bear is someone who believes the stock market will go down. A bull market is a rising market and a bear market is a falling market. Where does bull and bear come from? Some sources say that a bull knocks you up in the air (rising market) and a bear knocks you down (falling market). Investment Trivia
Shakespeare: Neither a borrower nor a lender be; for loan oft loses both itself and friend and borrowing dulls the edge of husbandry.
Winston Churchill said this: “Saving is a fine thing. Especially when your parents have done it for you.”
Groucho Marx: “Money frees you from doing things you dislike. Since I dislike doing nearly everything, money is handy.”
Julius Rosenwald: “Do not be fooled into believing that because a man is rich he is necessarily smart. There is ample proof to the contrary.”
Ecclesiastes 5:10 "Whoever loves money never has money enough; whoever loves wealth is never satisfied with his income."
Ecclesiastes 10:19 "A feast is made for laughter, and wine makes life merry, but money is the answer for everything."
You’ll want to stay away from the brokerage firms who's motto is 'Win 'em, spin 'em, churn 'em, and burn 'em.' Investment Trivia
We can all be reassured by this comforting saying from Bertrand Russell: "The most valuable things in life are not measured in monetary terms. The really important things are not houses and lands, stocks and bonds, automobiles and real state, but friendships, trust, confidence, empathy, mercy, love and faith."
American Financial Proverbs
Some are applicable only to the American market, while others pertain to investing in general and could apply internationally. They may or may not be true, as a little warning! Most countries and cultures have their own proverbs.
These are a few of my favorite anonymous well-known proverbs I've heard many times, although there are many, many more and another post will have financial quotations. It’s an interesting area to research. Please send in your suggestions and attributions and this post will be updated.
Buy low, sell high.
Bulls make money. Bears make money. Pigs get slaughtered.
Don’t try to catch a falling knife.
Buy on the rumor, sell on the news.
Sell in May and go away (not true this year!)
The trend is your friend.
Sell your losers and let your winners ride.
Don’t fight the tape.
The trend is your friend.
Buy when there is blood in the streets.
Think big. Think positive. Never show any sign of weakness.
Now is always the most difficult time to invest.
Look after the pennies and the pounds will look after themselves.
The last one is definitely British.
Here's An Interesting Stock Strategy
Bryan and Bob Auer | Auer Growth Fund
Bryan, 73, had been managing his own investments quite successfully for a long time when his son Bob, 48, took a job as a broker at Dean Witter Reynolds in 1986. Bryan opened accounts with his son but wasn't interested in the firm's research or recommendations. Rather, he had his own stock-picking system -- one the duo continues to employ at Auer Growth fund to this day: Cull through thousands of stocks looking for 25% earnings growth, at least 20% sales growth and a forward price/earnings multiple of less than 12. "Once a stock stops having those characteristics or doubles in price, we sell," Bryan says. "We started that process in 1987 and by 2007 our accounts had an annualized return of more than 30%," says Bob. So in late 2007 they launched Auer Growth, with Bob acting as portfolio manager and Bryan in charge of portfolio analysis. Naturally 2008 was an inauspicious time to start a fund, but for the year to date it's up 22%. When asked what's the greatest lesson he's learned from his dad, Bob laughs. "Only how to compound money at 30% a year." Wall Street Journal
Bob Auer was interviewed on CNBC today and made some sense on the bullish side. The article, called "Five Father-Son Teams Share Investing Secrets" by Dan Burrows,isappropriate to read anytime and now, just before Father's Day.
Their criteria :
EPS Growth This Year Over 25%,
Sales Growth Qtr over Qtr Over 20%,
P/E Under 10.
For Many Investors: Buy & Sell, Not Buy & Hold
"things are different this time. "The problem I have with the buy-and-hold strategy is that it's a bull-market strategy," says Matthew Tuttle, a financial adviser in Stamford, Conn. "In the bust, you give all of your profits back."
Every time I hear "it's different this time," it usually isn't. That maxim has long been echoed in times of flux, whether it concerns the housing bubble, the internet bubble and going all the way back to the tulip craze.
Of course, the traditional view of die-hard buy-and-hold investor John Bogle disagrees. "It's a fools' game," says John Bogle, the 79-year-old founder of mutual-fund giant Vanguard Group, which helped popularize index funds and the virtues of buy-and-hold investing. Not only will short-term investors pay more commissions, fees and other costs, but various studies have shown that market timers typically lose more money than buy-and-hold investors.
"If you want to trade the market, you've got to be right twice -- you've got to get out and get back in," he says.
What do you think? Is it different this time? Were you always skeptical of "buy-and-hold forever"? What will make money for you this year?
WSJ article
Merit Prizes Are Over-Taxed
Merit prizes, professional prizes, especially, for example, the Nobel Prizes, are not regarded tax-wise as an inheritance. They're taxed at 50% after deducting federal and state taxes, because they're thrown into the same tax bag as gambling winnings!
Is it any wonder, therefore, that UBS isn't giving out the names of Americans who have deposited money in Switzerland in private accounts to avoid taxes? It's not happening anytime soon.
Can you imagine the uproar if Nobel Prize winners and elite government officials were found to bank their money offshore, away from American taxes and the IRS? Can you imagine the backlash from voters?
America Is A Wonderful Country
There are so many causes of the recent financial collapse and each person will have a different explanation of the causes when they think about it. Memories fragment over time. The mists of time prevail.
If we could only rewind the clock and go back and change what went wrong. How far back would we have to go? Would we really want to go back to a possibly mythical simpler time with a straightforward, easy set of rules?
Looking forward, how will America adjust to new tight economic credit markets? If the Chinese obtain dominating control of our market and tighten credit? No American wants to go there. No one in the administration wants to talk about it, or even acknowledge it.
The focus is on credit and the economy, housing, foreclosures, lending limits, the stock market. The large issues of energy, healthcare and educational reform will have to wait.
What is the destiny of America that it can map out by itself and form a strategy to get there? What does America do well, the best in the world?
Here are a few important social values:
1. education for all.
2. cars, making and distributing, for almost all adults, green initiatives notwithstanding, and the oil and gas to run them.
3. household heat for all.
4. computer and software makers.
5. wealth consciousness and compassion for those less fortunate.
6. washers and dryers.
7. air conditioners.
8. crowd control when necessary, e.g. Disney Parks.
9. Disney and other outdoor parks.
10. food distribution is excellent.
11. Post office delivery sometimes is next day.
12. excellent highway infrastructure.
13. delivery services, like UPS and Fedex.
14. news services are pioneers.
There are so many more that I haven't listed. These above are a few values to get you thinking about "what makes America great". A friendly bank-lending environment may have dropped off my list. Financial services need better regulation to help Americans hold onto democratic ideals in the country. Saving AIG and Goldman and other companies involved in the bailout, if that's been useful, has many of us wondering when improvement will become clear.
As Dr. Christina Romer said yesterday on "Meet the Press", America has a wonderful base of labor, a capital base, technology and we will learn how to recover from this current economic "mess". She says it will take some time, but things should improve. Sales should pick up, jobs numbers should turn around, and consumer confidence should return.
Today's rocky stock market didn't instill much confidence. But hey, tomorrow is a new day.
Justice Must Be Seen To Be Done
This article by Vicky Ward about an upcoming article in Vanity Fair would appear to prove that the Noel family of Greenwich could be one of the biggest beneficiaries of Madoff's Ponzi scheme. They're still "living large and loving life".
It's interesting that many of Madoff's victims, seen on CNBC yesterday afternoon, are holding the SEC responsible for giving his firm the financial "seal of approval", rather as if they assumed his firm was "too big to fail" and solid because others trusted him with their money. Of course, he had pension and hedge money from many, like the pipefitters of Northern New York State, who had no idea that their money had been funneled off.
Makes sense that focusing on ways of being happy and at peace will take one's mind off the opposite. Doesn't it make you want to take up praying hard, if you don't already do a lot of it?
Four Big News Items
1. Merck announced it is buying Schering-Plough for U.S.$41.1 billion.
2. President Susan Arnold of mighty Proctor & Gamble just stepped down effective immediately (when does that ever happen?) and
3. President Obama announced lifting of strict limits on stem cell research.
4. The introduction of possibly the only verifiable painting of William Shakespeare.
Any one of them is shocking, but to have all four in one morning is just mind-boggling. They'll take some time for the market to digest.
Monday Morning Market Action
The manufacturing number of "US factory activity contracted again in February, but at a less severe rate, while construction spending dropped in January to its lowest level in more than four years" according to Marketwatch.
The fact that my purse was snatched midday yesterday at my suburban grocery store's parking lot near Princeton, New Jersey ("a safe area") is keeping me busy "staying on an even keel" -- a metaphor for market trading now.