Posted by: in Money News
Filed under: Rants and raves, Home Depot (HD), Lowe’s Cos (LOW), Presidential elections, Headline news, Stocks to Buy
 The first major economic act of presidential hopeful Barack Obama will be to add Hillary Clinton to the lower half of the democratic ticket. If he does not, he will be throwing caution to the wind.
All indications are that he does not want to do this and hopes he’ll not have to — but he might not have any choice.
It is just good business and if he is too stubborn, too arrogant, or just misguided by favorable polling numbers, he should think again. There are several Hillary supporters who will find McCain more centrist than Obama and switch parties. There will be very few, if any, to the right of McCain who will vote for Obama. They are more prone to not vote than support Obama.
Adding Hillary Clinton, in most people’s eyes, will slam dunk the presidential race and if Obama does not make this tough decision, putting success in front of politics and personalities, then I am afraid all his speak of being able to stand up to special interests and take the heat in the kitchen is just that.
You can’t hope to lead the nation if you cannot make a tough call before you even get to the Oval Office. Success in business, as with life in general, is all about making the tough call. Earlier in the month I did so with Serious Money: Tempting fate with 10 financials.
Today I’ll do so again by suggesting that it is time to get back into Home Depot (NYSE: HD) and Lowes Co (NYSE: LOW), two stocks that would be on the most hated list if there was one.
Both companies reported continued losses and most people hate the stocks right now. The prognosis for the housing market is still poor and consumers are cash-strapped and credit-restrained. However, Home Depot remains optimistic. Both companies have clean balance sheets and Home Depot is my favorite of the two because of the absence of debt and the 3.27% yield.
Home Depot shut yesterday at $26.96 and Lowes closed at $24.54. They are about 50% off their respective highs. If you think it’s too early, put them on your watch list and if you are correct you can purchase them cheaper. Or for you options players, perhaps doing puts would grant you to make some side money while you wait.
In my thought, you would be buying quality enterprises cheap for the long haul that’ll have competitive advantages over any upstarts when the economy picks up. Even if it does not do so soon, historically, homeowners and do-it-your-selfers will lend support to the stocks at these levels.
A glimpse of my track record: Serious Money: How safe were BRK, BUD, PG, SO, & UPS?
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. DISCLOSURE: I do not own shares of HD or LOW today.
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Posted by: in Money News
Filed under: Market matters, Federal Natl Mtge (FNM), Headline news, Housing
 Barron’s (subscription required) cites a government source who warns that absent raising at least $10 billion in capital each, Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) common and preferred shareholders will be wiped out or severely wounded in a government takeover of the two Government-Sponsored Entities (GSEs).
The problem with Fannie and Freddie is that depending on how you count the beans, their liabilities are worth more than their assets. Using so-called fair value bookkeeping — which marks their assets and liabilities to immediate market value — Fannie is worth $12.5 billion (a sliver of equity supporting $2.8 trillion in assets) and Freddie has a negative net worth of $5.6 billion. Others compute that both have a negative net worth of $50 billion.
The Bush administration wants to gut these GSEs (they’re Democratic strongholds). How will the GSEs perish? Barron’s reports that if Fannie and Freddie fail to raise at least $10 billion in fresh capital, the administration is “likely to mount its own recapitalization, with Treasury infusing taxpayer money into the enterprises. The infusion would take the form of a preferred stock with such seniority, dividend preference and convertibility rights that Fannie’s and Freddie’s existing common shares effectively would be wiped out, and their preferred shares left bereft of dividends.” But wait, there’s more.
The White House also wants to exact vengeance on Fannie and Freddie’s management. It will replace management, limit their investments, and sell their assets before reselling them to the public or merging them with other GSEs. In particular, Barron’s writes that “Treasury would install new management and directors at both, curb the GSEs’ sometimes reckless investment and guarantee operations, and liquidate in an orderly fashion the GSEs’ troubled $1.6 billion in on-balance-sheet investments. Then the companies could be resold to the public without their explicit government debt guarantees, or folded into government agencies like Ginnie Mae or the FHA.”
Whatever amount of taxpayer money is used to bail out Fannie and Freddie, I hope that the government uses the $38 million earned by taxpayers such as Richard Syron, Freddie’s CEO, and the other executives and directors of Fannie and Freddie, before it uses my taxes. Then they have the ability to go after the pay of those government regulators who were supposed to be supervising them.
They should pay the first price for their mistakes.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.
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Posted by: in Money News
Filed under: Rants and raves, Presidential elections, Oil, Headline news, Federal Reserve
 Republican presidential nominee-in-waiting, John McCain is going to be all smiles as we approach the November election. If you are a conspiracy theorist, or just find it a curious irony as I do, you must be noting that, just this week, the Federal Reserve decided to leave the Fed loan rate at 2%, the Iraq and U.S. governments are negotiating a withdrawal timetable for our troops, and oil prices are falling fast.
All of these headline-worthy items will benefit the Republicans more than the Democrats. Furthermore, all of these improvements will help the folks on Wall Street and Main Street. The stock market is way up today, they state on dropping oil prices: Stocks jump as oil prices fall sharply.
This has the taint of political engineering or “electioneering,” even if it is just coincidence. Maybe the world is just happy to see Dubya go into retirement … who knows?
Earlier I posted Obama’s $1000 giveaway is a take away! and now it’s time to rant about Dear John. He’s on record as claiming he has the ability to balance the federal budget by the end of his first term without raising taxes. I think we have heard that before. It’s not going to happen. Why do politicians insist on uttering such nonsense?
This ridiculous campaign rhetoric comes with ZERO corresponding thought about what major programs could be cut to even come close to this worthy goal. The answer is none that I know of.
The only way that the federal government will balance the budget will be if officials simply take more expenditures off-budget and pretend to have accomplished something. If you ask the American people what things government does extremely well, you will find agreement that it ‘pretends’ excellently.
If John McCain’s budget balancing act continues to be discussed, then he’s truly the more experienced candidate, for he can pretend with the best of them.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money.
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Posted by: in Money News
Filed under: Rants and raves, Apple Inc (AAPL), General Electric (GE), Exxon Mobil (XOM), Johnson and Johnson (JNJ), Chevron Corp (CVX), ConocoPhillips (COP), Politics, Presidential elections, Oil, Headline news
 If Barack Obama is receiving advice from “my pal Warren” then he must not be listening. There’s no way that Warren Buffett, the national debt hawk, would support Obama’s stupid idea of giving another $1,000 back to every family in America. It is reported that he would pay for this by creating a windfall profit tax on oil companies.
This give-away program is an attempt to purchase votes plain and simple. It would add to the national debt, discourage oil companies from investing and worse it would handicap American companies more than others and mortgage more of our children’s futures.
The last thing the the people of the United Says need is more deficit spending. If we did tax oil companies, which I am against, I would only support using the funds for expanding education, research and development in science and engineering with the goal of maintaining our waning leadership in technology.
We need to do things that increase our productivity. Increasing our dependency on government handouts is a colossal mistake.
The so-called windfall profits of the oil companies is another thing I question. The profits are large because the demand is high and the gross receipts are high. It is simply a large number, not necessarily a high margin. When the profits were absent during periods of lower oil prices, nobody stated anything.
Here are some net profit margin facts.
Three oil companies:
Three popular large non-oil companies in three different industries:
I would much prefer to hear anything about balancing budgets, or even just slowing down spending, not more government taxing and spending. In the end Obama’s give-away would be a take-away!
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of COP, GE, & JNJ.
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Filed under: Ripoffs and Scams
 Yesterday California’s Attorney General, Edmund G. Brown Jr., announced a lawsuit against YourTravelBiz.com (YTB) for being a “gigantic pyramid scheme.” He states that the multi-level marketing company recruited tens of thousands of members with false earnings claims.
YTB was supposed to a business through which members could operate on the internet travel agencies. In reality, it was nothing more than a pyramid scheme meant to make those at the top rich, while thousands of people below them lost a lot of money. The operation is accused of being a pyramid scheme because the members were paid for recruiting new members, regardless of whether they sold any travel services.
Members pay $450 to join the scheme, and a monthly fee of $50 to stay active. In 2007, it is alleged that there were over 200,000 members, and that only 38% of them made any money from selling travel services. The median income for those making commission on travel services was only $39. (You read that correctly… not even enough made all year to pay for one month of fees!)
Continue reading YourTravelBiz (YTB) sued by Attorney General for being “gigantic pyramid scheme”
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Filed under: Business, Finance, Utilities, Office
Invotrak is a simple to use, on the internet invoicing tool for small businesses or freelancers produced by Draconis Software. While we have covered it before some new additions make it worth another mention.
Basically this is a easy invoice app that you can use to create and track invoices and time sheets for yourself or your small business. You can use limited services for free or pay for three levels of account depending on how many invoices you plan to send.
Updates features include: the ability to upload invoices you have created yourself, add line items from time sheets to the invoice and adding reports to your invoices. You can also save your invoices as PDF or TXT files.
You can also read the Invotrak blog to get tips on using the new features and general small business tips - like how to get paid on time.
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Posted by: in Money News
Filed under: After the bell, Good news, Market matters, Money and Finance Today, Economic data, Commodities, Oil, Headline news, Federal Reserve, Recession
The Federal Open Market Committee issued its decision to leave interest rates at 2%. This was as expected. However, the statement was much more dovish than expected. Language in the previous statement indicating that downside risks to growth ” appear to have diminished somewhat” was deleted, and the focus clearly remained on the economic situation even though inflation risks continue to be acknowledged.
The U.S. equity markets rallied prior to the statement being released and continued after the decision was issued. Oil prices also continued their retreat.
The dovish nature of the decision was indicated by the fact that there was only one member voting for an increase. As many as three members were expected to vote for an increase. Despite the recent hawkish statements, all members voted to maintain the 2% level.
This confirms what I have said in current posts that hawkish talk does not necessarily translate into hawkish action. As I’ve stated in my book, Follow the Fed to Investment Success, “watch what the Fed does not what it says.”
The economy is still far too weak for the Fed to begin raising rates.
Doug Roberts is the Founder and Chief Investment Strategist for ChannelCapitalResearch.com, and is the author of Follow the Fed(R) to Investment Success: The Effortless Strategy for Beating Wall Street. He previously held executive positions at Morgan Stanley Group and Sanford C. Bernstein & Co.
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Filed under: Ripoffs and Scams, Technology
 The little play on words is obvious. Consumers are just a tiny bit closer to being free of early termination fees on wireless contracts. A California judge ruled this week that it was illegal for Sprint Nextel to charge early termination fees, and they have to refund over $18 million to consumers. The company must also stop trying to collect over $54 million in unpaid early termination fees from former customers.
Of course, Sprint Nextel is going to appeal so we shouldn’t get too excited yet. But this ruling is good for consumers, who are at the mercy of wireless providers who are looking for any excuse to get a little more money out of each of us.
The whole idea of an early termination fee is ridiculous. If you want to cease using our service earlier than you planned, you’ve to pay a couple hundred dollars. To not use the service.
Continue reading Early termination fees on wireless contracts one step closer to termination
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Filed under: Extracurriculars, Ripoffs and Scams, Fraud
 I received an email last week from Christina, who had her money taken by a door-to-door salesman, pitching magazines at inflated prices. The salesperson pretended to be a recently-returned Iraq veteran trying to get make a living, which was enough to disarm Christina. It is now many weeks later and the company has their money, but they have no magazine and the door-to-door sales company won’t respond to any inquires about the status of the order.
If you happen to get caught up in a door-to-door sales pitch like Christina did and like my wife and I did a year ago, there are a few steps you can take to try and get your money back. But time is of the essence.
In Ohio where both Christina and I live, there’s a three-day cooling off period where you can cancel the order. These sales companies don’t make it easy, so keep track of all of your records and follow the directions absolutely. I took the added step of putting a stop payment on the check despite the company’s threat of using a collection agency to come after anyone who dared take this action.
If it is too late to halt your check payment, there are a few more things you can try, but frankly your chances of recouping your cash are slim. You can try to use the Superior Business Agency to get your money back from the company (track down the BBB closest to the company’s headquarters.) Another step would be to find a fax or direct line for the headquarters and send in your request for cancellation and a refund. Finally if you want to feel particularly vindicated, you can sue in Small Claims court to recover the money that was taken. In Ohio you can sue for up to three times the amount of the original damages, and since the company must have a lawyer represent it, you’ll likely get a quick settlement out of court.
I hope you can learn from our mistakes, buying magazines from door to door salespeople is a bad idea. You’re superior off going to the publisher’s website to get the best deal or support a family member’s kid selling them through school. Door to door magazine sales are rife with high prices, scams and long delays in receiving magazines, save your money and avoid these traveling liars!
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Filed under: Ripoffs and Scams, Transportation
.jpg) A special circle of hell should be reserved for those who scam good Samaritans. Include in that category a Texas driver who posed as a motorist stranded on the highway by an empty gas tank. According to the AP, as a patrolman stood talking to the perp, a helpful motorist pulled up and handed the man a full 1-gallon can of gas.
After the cop found that the perp had an outstanding warrant, he arrested him. When he opened the trunk of the man’s Cadillac, he found four more full cans of gas. Apparently, the perp had been working the scam for a while, convincing motorists to purchase him not only gas, but gas cans as well.
I’ve been hit up for a few gallons of gas from the driver of an adjacent vehicle while I’m filling up at gas stations, and for gas money while catching a meal at a fast food restaurant, both times by people that appeared more than capable of earning a few bucks at casual labor. Stories such as this can only make it more difficult for those truly in need to get the help they need. The good Samaritans are only out a few bucks; the people really injured by this scam are the truly needy.
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