Why is it that….

The state of Florida adopts a spiffy new set of investor protections, yet says complaints against bad stockbrokers or investment advisors cannot be made public?

That’s what I learned in examining the case of Gary J. Gross, which you’ll see in the newspaper today. And here:
http://tr.im/xT6Y

I don’t get why you can’t know if a lot of other investors have a problem with the person you’re going to for advice. You could know this if it was a doctor. Are financial relationships any less important?

> Discuss this entry

The Federal Deposit Insurance Corp. says some funky things are happening with certificates of deposit.

The FDIC says there’s a game going on at some companies that can’t actually deliver an insured CD, but they’re selling them anyway.

The game goes like this: The company advertises high-rate, insured CDs. But you have to visit the office to get one. Then you find out that a minimum deposit is required and you may have to endure a sales pitch for other products. If you actually want the CD, you are then sent to a terminal to buy the CD over the Internet from the bank that’s actually FDIC-insured.

Protect yourself. Always check to see if the bank where you are buying the CD is FDIC-insured, really. And if the rate is far higher than normal (you can find normal at www.bankrate.com), ask why.

To read more, go here:
http://tr.im/pkI6

> Discuss this entry

April was a very good month for small stocks -- and most all stocks.

The Russell 20000 index, which measures the performance of smaller public companies, closed up 15.3 percent for the month.
That beat the Dow by a long shot. The Dow gained only 8.78 percent for the month.

And it was the second-best performance for the Russell 2000 in 30 years. The best: A 16.5 percent one-month gain back in 1979.

Wall Street's rally last month touched just about everything. The Wilshire 5000 Total Stock Market index reported a 10.5 percent rise, its best month since 1991.

Didn't realize it, did you? The bad economic news persisted, but the market was so over it.

> Discuss this entry

A reader on the island of Palm Beach adds up the news:

-In October, UBS, the Swiss banking giant, asks for and gets a $60 billion bailout from the Swiss government.

-In December, UBS sponsors Art Basel show in Miami and puts on a dinner of stone crabs and super jumbo shrimp for 800 clients in a tent on the beach.

-Last week, UBS, in a deal struck in federal court in South Florida, agrees to pay $780 million in fines, penalties and interest to defer prosecution on charges of aiding its clients to evade US taxes. The Justice Department is trying to force UBS to disclose the names of 52,000 wealthy U.S. customers that it suspects may have evaded taxes.

Bailouts and lavish dinners? Art and tax evasion? Swiss banking and criminal investigations?

What do you think? What's your experience with UBS?

> Discuss this entry

Who's worse for the stock market, Bush or Obama?
The market offers equal opportunity for each camp to cause investors to lose money.

Obama's inauguration was the worst inaugural day performance in history. The Dow swooned, falling 4 percent, more than 300 points. It's still hovering around where it landed that day, at 7,949.09

But what about Bush?
(Hint, markets duriing the previous presidency suffered from the tech stock bubble bursting, 9/11 and today's mortgage/housing/credit meltdown)

Wilshire Assocates provided this data on the very broad market index, the Dow Jones Wilshire 5000. The annualized total returns are:

> Discuss this entry

All I've got now is questions.

Is there something the stock market didn't know about the deteriorating state of the nation's economy?

Should traders be surprised to wake up to poor retail sales figures? To poor conditions throughout the economy, according to the Fed's quarterly Beige Book?

Why does it a surprise them that the economy will take a long while to recover?

Something's going on here. The traders know what we know, they've seen the statistics that define our economic lives. There's nothing new to the misery that continues.

So why should stocks fall every day on every number that simply describes what we already knew?

I don't think logic can ever, ever describe the market's thinking on a particular day. It's just inscrutable.

> Discuss this entry

With little more than an hour of trading to go, the Dow is ahead more than 600 as I write this. And it seems there are only two of those 30 stocks that are down.

Now, I'm not a great Dow fan, if you think that's the one and only important market barometer.

But I'm applauding now, as the Dow sails down toward the wire and it's largest one-day point gain ever, if it closes above 500 up.

It seems to be supported by more than mere glee. There seems to be solid reasons - dropping international interest rates, banks shored up with real capital -- that could lead us to believe the market is turning. Even Alcoa is up, despite a debt downgrade.

Of course, it'll take a while to see if this is true, but for now, this is good.

> Discuss this entry

Welcome to The Market’s Not Melting Down Party.

What a relief. Not that anyone can guess whether this is going to last, but at least it’s a 500-point-upside on the Dow morning. I’ll take that.

It comes after many investors decided they could not take it and moved to cash.

Cash still is the main thing that seems to be moving the markets.

The big upswing seems to be in reaction not to the bailout getting going, although the breadth and depth of detail on its operations revealed this morning was impressive.

It seems to be more to be a reaction to the Fed, in conjunction with central banks in Europe and England, announcing that banks will be able to borrow essentially any amount they wish.

No limits. Just come on in and you can always get your backstop at the Fed.

That, combined with Britain, German and France each announcing rescue packages and bank bailouts, convinced lenders to start lending to each other again. Libor, an international rate for lending, plummeted.

And did anybody notice that oil is around $81 a barrel?

That won’t bring the housing market back, but it could have a big impact on consumer spending.

> Discuss this entry

Just got a feeling that we've been spooked enough. I've read your comments and the genuine fear that I see is about bank deposits and mortgages being made.

The FDIC, in my opinion, has been doing a great job of arranging mergers and reassuring depositors. Credit unions want you to know they, too, carry federal insurance from the National Credit Union Administration. .

Goldman Sachs, Morgan Stanley and recently Raymond James have decided to become commercial banks. Doesn't that give you a sense that deposits are sound?

I think the best idea of the morning is to increase FDIC insurance limits, so that depositors are more assured.

FDIC insurance premiums are paid by the industry. And isn't it about right that banks, the ones with all those sound deposits, chip in to resolving this crisis of confidence?

> Discuss this entry

They warned us about disaster.
Congress brought one about today. More than 777 points on the Dow are gone. And the Bailout Bill is toast.
If ou've been reading this blog, you know that I don't think it's designed to help homeowners much at all.
Or to cure the housng industry's ills.
Those are the "root causes" of the problem, in Treasury Secretary Henry Paulson's phrase.
But they're not getting a solution.
The trouble here is the characters who brought this crisis about are not the ones who are paying for it now. All of us are. All investors. Anyone who needs a loan. Credit card holders, too.
The people who did this, they're not on the hook.
What does the market meltdown mean to you?

> Discuss this entry

If the current markets have convinced you that you're not really a long-term investor -- and by that I mean five years or more -- and you want out, I have a word for you.

Wait. Don't sell at the bottom.

But how long?

If past financial crises are any guide, data from Morningstar shows that in recent fits of market panic, it pays to wait three to five years after the crisis. Because by then you'll be ahead.

The point is taken form Morningstar's look at stock and bond markets in the wake of the October 1987 stock market crash, the August 1989 savings and loan crisis, the September 1998 bailout of Long Term Capital Management, the March 2000 dot-com crash and the September 2001 terrorist attacks.

In three out of five panics, if you'd held on to an all-stock portfolio for five years, you would have been substantially better off than if you had sold at the low point.

Five years after the '87 crash, the stock portfolio would have a 98.6 total return; after the S&L crisis, 58 percent return; and after the terrorist attacks, a 40.1 percent return. Long Term Capital's five-year record was up only 5.1 percent and after the dot-com crash, you would have been down 14.8 percent.

Can't hold on for five? The three year-record is good, too, in three out of five and OK in the fourth. Even a year helps stocks get back to even and off the bottom in most cases.

Six months, though, won't do it. Three times out of five, stocks were still down.

> Discuss this entry

Some sensible things are starting to happen.

Stock prices are down, so Nike, Hewlett Packard and Microsoft today are launching stock buyback programs, for a combined total of $53 billion.

That's normal behavior. Buy low kind of stuff.

We haven't seen normal in so long, it's rather exciting.

Without knowing the details, my initial impression of Goldman and Morgan Stanley becoming banks is good. The Federal Reserve would regulate their holding companies.

It does not mean that extraordinary risk-taking below the holding-company level wouldn't happen. But it might mean that when the upper echelon becomes involved in extraordinary risk-taking, regulators would become aware. And their reactions would have great weight in whether these activities would be allowed to continue.

For quite some time to come, the notion of risk and how to avoid it will predominate.

And someone, even if it's not the CEO or the board, will be demanding transparency from inside large financial institutions.

How stock and bond markets react to those two trends is what I'm wondering about. Will we see a bunch of petulant traders, pushing stocks down? Or will conservative investments become the vogue?

Because of course people are asking today, where should I put my money now? Housing's bust. Stocks are bust. Where?

I'm happy to hear from anyone who'd like to comment.

> Discuss this entry

The market closed within arm's reach of last Friday's close.
The Dow ended its most amazing week ever at 11,375.8, only 33.56 points below where it was one week ago.

But oh, has the debate started.

My inbox is full of people hailing the government's many actions or hating them. The taking of mortgages from the banks will turn into a $1trillion taxpayer bill bailout. Or the government's getting these mortgages at a very cheap price and could eventuallly profit from them.

A week ago, the world's largest insurer was not a government controlled company. Lehman Brothers was still in business. No money funds had broken the buck in 14 years.

My take: We should be slammed with so many new regulations that make sure the taxpayer's money is well spent.

And investors should demand, insist, on transparency. Some of the things I found on AIG's books were amazing to me. How anyone who looked could not have been worried, I don't know.

I'm not entirely sure it's over. I don't know what will happen next. But it sure feels better.

> Discuss this entry

Whew.

For the moment, I'm not afraid to check on the markets.

I think the most crucial step, of the many announced this morning, was the shoring up of the money
market mutual funds. That should restore some investor confidence.

And of course, stopping the shorting of 799 financial stocks.

I don't know what will happen when that ban expires in October.

But for the moment, I'm relieved.

What do you think of this crazy week on Wall Street?

> Discuss this entry