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Mar
30 |
by Kelli B. Grant Thursday, March 12, 2009provided by If you haven't had the credit limit cut on your credit card recently, count yourself lucky. Risk-averse card issuers are getting slash happy. And while many cardholders gripe that such cuts slice razor-close to their balance amounts, for an unfortunate few the cuts go far deeper: below what they currently owe. Under different circumstances, David Chaplin-Loebell wouldn't have minded that American Express cut his unlimited credit line to just $5,000. Except that when AmEx reduced his line in October, he had an outstanding balance of $10,000. "I found out by having a business purchase declined," he says. Repeated calls to AmEx failed to yield an answer about why the cut was made. Chaplin-Loebell, who lives in Philadelphia, is now paying the balance under his regular card terms, and presumes the line will free up for new purchases once he's below the limit. "For now, they've essentially frozen the account," he says, leaving him to juggle business expenses on his personal cards. American Express did not respond to requests for comment. Nasty as it may be, the practice of cutting credit lines below the balance is legal -- at least, for now, says Chi Chi Wu, a staff attorney for the National Consumer Law Center, a consumer advocacy group. Federal Reserve rules requiring lenders to give cardholders 45 days notice before reducing a credit line to the point that it would trigger penalties won't go into effect until July 2010. "[Until] then, there are no federal protections," says Wu. Congress is also hoping to rein in unscrupulous credit-card practices. In February, Sen. Chris Dodd (D., Conn.), chairman of the U.S. Senate Committee on Banking, Housing and Urban Affairs, reintroduced the Credit CARD Act, which among other things, offers cardholder protections like the ability to pay under the existing terms if an account is closed and requiring issuers to lower penalty rates within six months once a cardholder gets back on track with payments. Earlier this month, the House Committee on Financial Services chairman Barney Frank, announced a series of four hearings that will include discussions about credit card reform. SmartMoney.com contacted both committees to see if they were aware of issuers' practice of cutting credit lines below balances, and if they planned to address it in upcoming hearings. Neither responded to requests for comment. The motivation among issuers to make such deep cuts that they plunge below a cardholder's balance amount isn't very clear. Usually, issuers cut credit lines to reduce outstanding liabilities -- they sometimes may even chase the balance on riskier accounts with further limit cuts as cardholders pay down debts, explains Bill Carcache, an analyst with investment bank Fox-Pitt Kelton. But cutting below the balance doesn't reduce an issuer's liability: The cardholder still owes the outstanding debt. One possibility is that this is yet another attempt by card issuers to get consumers to close their accounts (while bringing in a little fee income in the short term), says Dennis Moroney, research director and senior analyst for consulting firm Tower Group. "I can't rationalize in my mind what other motivation there would be," he says. Paul Pensabene of Saratoga Springs, N.Y., received a statement from HSBC on Dec. 8 that said he had a $359.99 balance and remaining available credit of $8,640. But when he went online to pay the bill several days later, his online account showed that same balance put him over his newly-reduced credit line of $300. And that didn't include the $35 over-limit fee. Pensabene grappled with customer service until they agreed to remove the fee, and then paid the balance in full. "All I could think was, 'Good lord, what if this is happening to someone that couldn't pay their balance off in one shot?'" he says. "They'd end up in default with these fees piling up." HSBC declined to comment on individual cardholder accounts. Spokeswoman Cindy Savio says the issuer has tightened its credit standards based on the economy. "As we have previously stated, in an effort to reduce credit risk and refine strategies for our card business, we have tightened credit standards, reduced or canceled higher risk credit lines, and closed a number of inactive accounts," she says. While the fees, frozen accounts and default interest rates resulting from credit-line cuts can sting your finances, they can do some serious long-term damage to your credit score. Your credit utilization ratio -- the total amount of debt you owe in relation to the amount of credit available to you -- accounts for roughly 30% of your score. A credit line cut has the potential to decrease your score by 50 points or more if you don't have much other available credit, says Craig Watts, spokesman for FICO, the company that calculates and issues the credit score that most lenders use. Even cuts that are close to the balance have the potential to devastate if they're not caught quickly. Luckily for Carol Gressett of Decatur, Miss., she noticed the reduction in her Discover-branded Sam's Club card limit just days after it happened. The limit was cut to within $100 of her $3,000 balance. The official letter notifying her of the reduction arrived three weeks later. "We could easily have gone over if I hadn't been paying attention," she says. (A Discover spokesperson says GE Money issues the cards, and so is responsible for managing credit lines. GE Money did not respond to requests for comment.) Copyrighted, SmartMoney.com. All Rights Reserved. http://finance.yahoo.com/banking-budgeting/article/106716/How-to-Blow-Your-Credit-Limit-Without-Spending
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Feb
04 |
WASHINGTON – The cost of President Barack Obama's economic recovery plan now exceeds $900 billion after the Senate added money for medical research and tax breaks for car purchases. It could go higher Wednesday if a tax break for homebuyers is made more generous, even as centrists in both parties promise to clear away spending items that won't jump-start the economy immediately. In an interview on CNN, Obama signaled a willingness to drop items that "may not really stimulate the economy right now." He also signaled he'll try to remove "buy American" provisions in the legislation to avoid a possible trade war. In a victory for auto manufacturers and dealers, Sen. Barbara Mikulski, D-Md., won a 71-26 vote to allow most car buyers to claim an income tax deduction for sales taxes paid on new autos and interest payments on car loans. The break would cost $11 billion over the coming decade but could mean savings of $1,500 on a $25,000 car. "Just as we need to get the housing market going, we need to get auto sales going," said Sen. Debbie Stabenow, D-Mich. Wednesday's session could produce even more generous savings for homebuyers. Sen. Johnny Isakson, R-Ga., is pressing for a tax credit of up to $15,000 for everyone who buys a home this year, at a cost of $18.5 billion. The pending measure would award a $7,500 tax credit only to first-time homebuyers. At the same time, centrist senators, including Ben Nelson, D-Neb., and Susan Collins, R-Maine, are seeking to cut tens of billions of dollars from the legislation. They're operating with the blessing of Democratic leaders, who hope a successful effort could attract some GOP votes for Obama's plan. Obama summoned Collins to a White House meeting Wednesday afternoon, a Collins aide said. Democratic leaders conceded they may soon be obliged to cut billions of dollars from the measure. "It goes without saying if it's going to pass in the Senate, it has to be bipartisan," said Sen. Dick Durbin of Illinois, the second-ranking Democratic leader, adding that rank-and-file lawmakers in both parties want to reduce the cost of the bill. In a series of skirmishes Tuesday, the Senate turned back a proposal to add $25 billion for public works projects and voted to remove a $246 million tax break for movie producers. Both moves were engineered by Republicans who are critical of the bill's size and voice skepticism of its ability to create jobs. But several hours later, GOP conservatives didn't contest approval of a $6.5 billion increase in research funding for the politically popular National Institutes of Health. That amendment, by Tom Harkin, D-Iowa, drove the price tag of Obama's plan just above $900 billion. Democratic leaders have pledged to have the bill ready for Obama's signature by mid-month, and in a round of network television interviews Tuesday, the president underscored the urgency. He told CNN that even three months ago, most economists would not have predicted the economy was "in as bad of a situation as we are in right now." He also spoke out against efforts to require the use of domestic steel in construction projects envisioned in the bill, telling Fox News, "We can't send a protectionist message." Mikulski's office put the cost of the automobile tax break she sponsored at $11 billion over 10 years. It would apply to the first $49,500 in the price of a new car purchased between last Nov. 12 and Dec. 31, 2009. Individuals with incomes of up to $125,000 and couples earnings as much as $250,000 could qualify, including those who do not itemize their deductions. Republicans are expected to seek a vote later in the week on a plan to inject the government into the mortgage industry in an attempt to drive down interest rates on mortgages to as low as 4 percent. Democrats treaded carefully on the proposal, saying they would consider it but also claiming the $300 billion Republicans allocated would not come close to accommodating the demand.
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Jan
27 |
Jan 27, 2009 (Zacks Investment Research via COMTEX News Network) -- Companies noted here include D.R. Horton (DHI), KB Home (KBH), MGIC (MTG), PMI Corp (PMI) and Colgate Palmolive (CL).In December, existing home sales rose 6.5% to a seasonally adjusted annual rate of 4.74 million from November's rate of 4.45 million (originally reported as 4.49 million). Even more encouraging, the inventory of homes for sale dropped a sharp 11.7% to 3.68 million.While it is normal for inventories to drop in December, this was a much bigger-than-normal drop. That puts the months of supply down to 9.3 months, from 11.2 months in November.As the Chart (from http://www.calculatedriskblog.com/) shows, 9.3 months is still pretty ugly (normal is 4-5 months), though it is good to see it moving rapidly in the right direction. On the other hand, the increased sales came at a price, namely a much lower price. The price of a median home fell 15.3% from a year ago and now stands at $175,400. This is also sharply below the median price for all of 2008 of $198,000, indicating the slide in prices is continuing. Distressed sales, mostly foreclosures, accounted for 45% of all sales in December. The improvement in sales happened for both single-family homes (up 7.0% month over month but down 1.4% year over year) and for condos (up 2.1% month over month but down 18.4% year over year). The Northeast was the only region that did not see an increase in sales on a month over month basis, falling 1.4%, and down 14.3% year over year. It has also seen the least deterioration in median price over the last year, down 7.8% to $235,000. The Northeast is the smallest region of the country in terms of housing. The West had the biggest improvement, with sales up 13.6% on a month-over-month basis, and up 31.6% year over year. However, it also had the largest drop in median price of 31.5% to $213,100. The South, which has by far the most home sales, posted the next best performance, with sales up 7.4% on a month-over-month basis, but down 11.2% year over year. The median price in that region is down 8.0% year over year to $158,600. The Midwest was up 4.0% month over month and is down 10.3% year over year. It is the cheapest region with a median home price of $140,800, down 11.4% from a year ago. This shows that the market does work -- if prices get low enough, people will buy. Lower prices are not without costs, most significantly the wiping out of the equity of millions of Americans. I don't think the decline in home prices is over, but perhaps this is at least the end of the beginning. While there seems to be a little bit of light at the end of the tunnel, it still strikes me as too early to jump into the Homebuilders like D.R. Horton (DHI) and KB Home (KBH). The decline in home prices is also a significant negative to the Private Mortgage Insurance firms like MGIC (MTG) and PMI Corp. (PMI). Stick to safer names like Colgate-Palmolive (CL), instead. Read the full analyst report on DHI Read the full analyst report on KBH Read the full analyst report on MTG Read the full analyst report on PMI Read the full analyst report on CL Get real-time market insights and profitable stock recommendations from the team of analysts at Zacks Investment Research.See all today's Analyst Blog entries. Copyright (C) 2009, Zacks Investment Research.
http://www.wallst.net/news/IDCNEWS/2009/01/27/wow-good-news-in-housing/
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Jan
16 |
Government broadens Temporary Liquidity Guarantee Program to guarantee secured bank debt until 2019, hoping to encourage new lending.
NEW YORK (CNNMoney.com) -- Federal banking regulators are considering a plan to dramatically expand a lesser-known bailout program that provides government guarantees to hundreds of billions of dollars of corporate debt. The Federal Deposit Insurance Corp. will likely change its so-called Temporary Liquidity Guarantee Program later this month, by extending the maximum maturity of its payment guarantee on new "covered" bonds issued by banks to 10 years from three years. Covered bonds are issued by banks, backed by collateral, like a mortgage or a consumer loan, that exists on the bank's balance sheet. It is different than an asset-backed security, which does not require banks to actually own the asset they use to back the debt issuance. The bonds are popular in Europe, but have only been offered on a limited basis in the United States. Under the new extension, the program would cover secured debt issued from January 2009 until June 30, 2010. The government's move is aimed at encouraging new lending, and, at the same time, protecting its own credit risk, said FDIC official Michael Krimminger on a conference call with reporters. "Banks are looking at ways to get liquidity so they can lend it out," said Krimminger. "Longer-term financing for banks gives them longer stability in their funding sources." Borrowers have been reluctant to take on debt from a company they're not sure will be on solid footing many years out, and the market has been wary of taking on assets of any kind recently. Subsequently, the issuance of longer-term debt backed by assets has been lagging, and the securitization market - the breaking up of loans into securities that sell like stocks - has remained moribund for many months, said Krimminger. The new FDIC extension could help get around both of those problems, because it guarantees losses borrowers may suffer if the bank can't pay, and it helps banks issue loans despite holding assets that may scare some investors. "Banks have a lot of assets on their balance sheets, but not access to liquidity based on those assets," Krimminger added. Treasury Secretary Henry Paulson has also supported a covered bond market, saying in early 2008 that a widely-used covered bond market in the United States would help restore liquidity to the financial markets. Furthermore, the FDIC only extended the guarantee for covered bonds - not unsecured debt - presumably because the government wants more assurance if it is going to make guarantees for 10 years. "The FDIC doesn't want to be on the hook for unsecured guarantees for seven years," said Steve Van Order, fixed income strategist for Calvert Funds. "The FDIC wanted more coverage for that, and they got that with the collateral support offered by covered bonds." Program has helped so far The FDIC will continue to guarantee banks' issuance of unsecured debt, usually in the form of corporate bonds, for up to 125% of a bank's total debt outstanding as of Sept. 30, 2008 that was scheduled to mature on or before June 30, 2009. That program will remain at its current limit. So far, the initiative has backed $232.2 billion in corporate debt for an estimated 1,600 banks. The program does not solely cover the 8,500 banks the FDIC insures - the government automatically enrolled all depository banks, bank holding companies, financial holding companies and some financial institutions in the program, giving them the option to opt out. As of Thursday, 5,900 banks have opted out. The FDIC's guarantee program has attracted numerous participants, including Citigroup (C, Fortune 500), General Electric (GE, Fortune 500) finance division GE Capital, JPMorgan Chase (JPM, Fortune 500), Wells Fargo (WFC, Fortune 500), Bank of America (BAC, Fortune 500) and Goldman Sachs (GS, Fortune 500), which months ago applied for "bank holding company" status so it could receive government aid for banks. Early indications show the plan is working. Corporate bond yields are down, making lending cheaper for businesses. And credit default swaps - insurance contracts on debt - have also become much less expensive. The planned expansion of the Temporary Liquidity Guarantee Program was announced by the FDIC shortly after midnight Friday as part of the provisions of the Bank of America bailout, also announced Friday. The FDIC has not formally announced its plan, but said its board will propose rule changes at a meeting in late January. In the end, the FDIC said it hopes to foster the growth of a truly private covered bond market in the United States after it stops issuing new guarantees at the end of June 2010. http://money.cnn.com/2009/01/16/news/economy/fdic_tlgp/index.htm?postversion=2009011616
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Jan
14 |
SEATTLE (AP) -- Apple Inc. co-founder and Chief Executive Steve Jobs said Wednesday he is taking a medical leave of absence until the end of June -- just a week after the cancer survivor tried to assure investors and employees his recent weight loss was simply caused by a treatable hormone deficiency. Jobs, 53, said in a letter last week that he would remain at Apple's helm despite the hormone deficiency, and said he had already begun the "relatively simple and straightforward" treatment for the problem. But in an e-mail to employees Wednesday, Jobs backtracked. "During the past week I have learned that my health-related issues are more complex than I originally thought," he wrote. Apple's chief operating officer, Tim Cook, will take over Jobs' responsibilities while he is on leave. After-hours trading on Apple shares was halted. The Cupertino, Calif.-based company's stock had sank $2.38, or 2.7 percent, to close at $85.33. Jobs announced in 2004 that he had undergone successful surgery to treat a very rare form of pancreatic cancer -- an islet cell neuroendocrine tumor. The cancer is easily cured if diagnosed early. Jobs did not have a deadlier and more common form of pancreatic cancer called adenocarcinoma.
http://finance.yahoo.com/news/Apple-CEO-Jobs-takes-medical-apf-14063916.html
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Jan
08 |
http://articles.moneycentral.msn.com/learn-how-to-invest/10-investing-basics-from-Buffett.aspx
Last year's market madness didn't just flush away $7 trillion in wealth. It also washed away a lot of investors' confidence and left them stumped about the best position to take now. "Somewhere between cash and fetal," quips one pessimist. In such downbeat times, let's consider a dose of optimism, wisdom and insight: the basics as taught by that perennial investing Yoda, Warren Buffett. For new investors or those now starting over, there's good news here because Buffett's investment success comes from some easy-to-grasp human qualities as much as sophisticated expertise in balance sheets. Buffett would be the first to say his homespun and positive philosophy played a big role in his becoming the richest person in the world (before he gave most of his loot away). Changing your basic psychology can be tough, so new investors may have a leg up here because they don't have ingrained bad habits. But for anyone, a psychological makeover is worth the effort if you hope to recover your losses in the market's next leg up -- and then make the right moves for the rest of your life. My tour of the essence of Buffett's wisdom starts with the simple psychological lessons taught by the master, many of which are applicable in life outside investing. Lesson No. 1: Be frugalIf the economic downturn is forcing you to live simply, look on the bright side: It's making you more like Buffett.Buffett lives in the same modest house in Omaha, Neb., that he bought more than five decades ago. He drives his own car. How does this makes him a better investor? First, it gives him more to invest. Second, a frugal investor will demand this quality from managers. Buffett is leery of corporate waste. Excessive executive pay or silly perks are red flags. Buffett once quipped that companies stack pay committees with "sedated Chihuahuas." Third, frugal people don't need fast returns to support extravagant lifestyles. This leaves them free to think more clearly about when to buy and sell stocks, making them much better investors, believes Stephen Shueh, a Buffett expert and managing partner of Roundview Capital in Princeton, N.J. Lesson No. 2: Wait for the 'fat pitch'Resist the itch to constantly buy or sell stocks."Lethargy bordering on sloth remains the cornerstone of our investment style," quipped Buffett in his 1990 annual report to Berkshire Hathaway (BRK.B, news, msgs) shareholders. Have the patience to wait a long time until some market turbulence brings the "fat pitch," as Buffett calls it, or stocks of great companies trading at really cheap valuations. We see that now in the market. Key Buffett holdings such as BNSF Railway (BNI, news, msgs) and third-quarter purchases like ConocoPhillips (COP, news, msgs), Eaton (ETN, news, msgs), NRG Energy (NRG, news, msgs) and US Bancorp (USB, news, msgs) all appear to be in the range where Buffett would -- or did -- buy. Lesson No. 3: Be a contrarianA great way to make money is to go against the crowd. "We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful," Buffett explained in a 1986 letter to shareholders.
So be skeptical of the conventional wisdom. Not because the crowd is always wrong but because the crowd's wisdom is probably already reflected in market prices, says Todd Lowenstein, a portfolio co-manager of the HighMark Value Momentum Fund (HMVMX). Right now, for example, many investors are extremely negative, suggesting it's a good time to buy stocks. Buffett is. Lesson No. 4: Stick with what you knowOne of Buffett's basic rules is: If you don't understand a company's product or how it makes money, avoid it. He calls this "staying within your circle of confidence."This isn't always easy. During the late 1990s boom, Buffett famously avoided tech companies, confessing that he could not understand what they did. He looked dumb until the bubble burst. "Ultimately, when it came full circle, he was proven right," Lowenstein says. Lesson No. 5: Don't depend on others to say you're rightIf you are in need of constant affirmation about your investment decisions, particularly from the stock market, you won't be able to invest like Buffett, points out Legg Mason (LM, news, msgs) money manager Robert Hagstrom in his book "The Warren Buffett Way."That's because Buffett makes outsized returns by purchasing disliked value stocks that are so beaten down they're often virtually ignored by the talking heads. They won't be on TV every week telling you that you made the right choice.
Lesson No. 6: Buy companies cheapThis is the essence of being a value investor. The first step involves calculating what Buffett calls an "intrinsic value" for a business -- either by examining what similar companies sell for or calculating the present value of all the cash that will be generated by a company in the future. For more details on how to do this, you'll have to consult books such as "The Warren Buffett Way" or "The Market Gurus" by Validea's John Reese.Next, build in a "margin of safety" by purchasing a stock well below its intrinsic value. Buffett doesn't pay much attention to earnings per share, a common measure of value. Instead, he likes to see companies with good return on equity, solid operating margins and reasonable or no debt. He also likes to see that companies generate a lot of cash and that they invest it well or return it to shareholders in the form of dividends or buybacks. The key throughout this analysis is to look back over five years or more. Buffett wants to see a consistent operating history; he's not into startup companies. He also prefers to gauge how well a company does in different kinds of markets, not just the good times or the latest quarter. Lesson No. 7: Look for companies with economic moatsA key characteristic supporting consistent operating history is a sustainable competitive advantage. In other words, a company should have a barrier to entry -- or a kind of moat -- that keeps potential competitors at bay.This could be a patent protection on drugs, high costs to get into a business or simple brand power, fund manager Lowenstein says. "Franchise" businesses like these can do well because they have the power to raise prices. In contrast, companies in "commodity" businesses have to take whatever price is set by a competitive market -- which can crush profits during hard times. BNSF Railway is a great example of a "franchise" business. It's pretty hard for anyone to lay enough track in North America to start a competing railroad. Coca-Cola (KO, news, msgs), another long-term Buffett holding, has barriers to entry in the form of a strong global brand and distribution system that is hard to replicate.
Lesson No. 8: Buy big, concentrated positionsMost professional money managers protect against risk by diversifying. Buffett goes against the crowd here, too. When he finds a company he likes, he piles into it big time.This is crucial to his success. Money manager Hagstrom calculates that if you eliminate a dozen of Buffett's best investment choices over his career, he's only an average performer. Buffett thinks his risk protection comes from understanding a business better than the market does and then being patient enough to buy it at the right price. Lesson No. 9: Hold for lifeBuffett quips that his favorite holding period is "forever." Embedded in this concept are two key Buffett tenets I've already alluded to. First, it's worth investing only in companies that are good enough to outperform for decades. Next, you have to think on your own and avoid the madness of the crowd.
"Buffett believes that unless you can watch your stock holdings decline by 50% without becoming panic-stricken, you should not be in the stock market," Hagstrom says. This doesn't mean buy and forget. Buffett tracks his investments closely and gets out when he thinks that they are fully valued or that trouble is on the way, points out Pat Dorsey, the director of stock analysis at Morningstar (MORN, news, msgs). A few years back, Buffett sold big positions in Fannie Mae (FNM, news, msgs) and Freddie Mac (FRE, news, msgs), the home mortgage companies that blew up last year. Buffett is not infallible, however. He still owns big positions in Gannett (GCI, news, msgs) and Washington Post (WPO, news, msgs) even though he forecast at his 2004 annual meeting that the newspaper business would see nothing but trouble for decades. The price of his company's stock -- always a major part of his wealth -- dropped 31% in 2008 as it followed the market down. Lesson No. 10: Believe in AmericaUnlike most investors, Buffett doesn't tweak his portfolio depending on which party is coming into office or where we are in the economic cycle. This may make him seen naive. But it also has him putting money to work now, when many others have lost faith in the U.S. economic system. It's a move that will likely make him a winner down the road yet again.After all, the current fears about the long-term prosperity of U.S. companies make no sense, he wrote in an October op-ed column in The New York Times. That's why he's also been busy moving his personal investment money from bonds to stocks in this pullback. "These businesses will indeed suffer earnings hiccups, as they always have," he wrote. "But most major companies will be setting new profit records five, 10 and 20 years from now." At the time of publication, Michael Brush did not own or control shares of any company mentioned in this column.
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Jan
07 |
WASHINGTON (CNN) — Another major American industry is asking for assistance as the global financial crisis continues: Hustler publisher Larry Flynt and Girls Gone Wild CEO Joe Francis said Wednesday they will request that Congress allocate $5 billion for a bailout of the adult entertainment industry. “The take here is that everyone and their mother want to be bailed out from the banks to the big three,” said Owen Moogan, spokesman for Larry Flynt. “The porn industry has been hurt by the downturn like everyone else and they are going to ask for the $5 billion. Is it the most serious thing in the world? Is it going to make the lives of Americans better if it happens? It is not for them to determine.” Francis said in a statement that “the US government should actively support the adult industry's survival and growth, just as it feels the need to support any other industry cherished by the American people." “We should be delivering [the request] by the end of today to our congressmen and [Secretary of the Treasury Henry] Paulson asking for this $5 billion dollar bailout,” he told CNN Wednesday.
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Oct
20 |
WASHINGTON (Reuters) - U.S. Federal Reserve Chairman Ben Bernanke told Congress on Monday that another wave of government spending may be needed as the economy limps through what could be an extended period of subpar growth. "With the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate," Bernanke said in prepared remarks for delivery to a congressional panel. It was the first time that Bernanke had explicitly endorsed a second stimulus package. The government sent out about $100 billion in checks over the summer to try to jump-start the economy, but consumer spending has struggled since then. Retail sales fell for three consecutive months through September. Bernanke, who is testifying before the U.S. House of Representatives Committee on the Budget, said Congress should consider including measures to improve access to credit, but did not specify what form they ought to take. He said there were some encouraging signs that steps taken so far to unfreeze credit markets were helping, but it was too soon to assess their full effects. "The stabilization of the financial system, though an essential first step, will not quickly eliminate the challenges still faced by the broader economy," he said. (Reporting by Emily Kaiser and Mark Felsenthal; Editing by Andrea Ricci)
http://www.wallst.net/news/REUTERS/2008/10/20/bernanke-says-another-stimulus-plan-may-be-warranted/
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Oct
17 |
Oct. 17 (Bloomberg) -- Warren Buffett said he's buying U.S. stocks and, if prices stay attractive, his personal investments, as distinct from his stake in Berkshire Hathaway Inc., will soon be wholly in American equities. Writing in the New York Times, he said he's following the principle: be fearful when others are greedy, and greedy when others are fearful. Exaggerated concern about the long-term prosperity of financially secure U.S. companies is foolish, and most will probably be setting profit records in years to come, Buffett said. While short-term stock movements can't be foretold, the likelihood is that the market will recover before the economy or general investor sentiment do so, and ``if you wait for the robins, spring will be over,'' he said. Referring to the 1930s Depression, Buffett pointed out that the Dow reached its nadir on July 8, 1932; economic conditions continued to deteriorate until Franklin Roosevelt became president in March 1933, and by that time the market had climbed 30 percent. Bad news, Buffett concluded, is an investor's best friend, for it enables you to buy ``a slice of America's future at a marked-down price.'' Buffett, ranked the richest American by Forbes magazine, has committed at least $28 billion this year to acquire companies, finance buyouts and purchase securities for Berkshire as the contraction in global credit markets drove down stock prices and sent firms searching for funds. Widely Imitated Buffett built Nebraska-based Berkshire over four decades from a failing textile manufacturer into a $180 billion holding company by buying out-of-favor securities and businesses. Berkshire was the largest stockholder of Coca-Cola Co., Wells Fargo & Co., and Kraft Foods Inc. as of June 30, according to Bloomberg data. Mutual funds and individuals mimic his stock picks in an effort to duplicate his success, and an academic study in 2007 found that using this strategy for 31 years would have delivered annualized returns of about 25 percent, double the gains of the S&P 500. Berkshire advanced $3,650, or 3.2 percent, to $116,800 at 12:02 p.m. in New York Stock Exchange composite trading. The company has declined about 18 percent this year, beating the 35 percent drop of the Standard & Poor's 500 Index. To contact the reporter on this story: Alan Purkiss in London at apurkiss@bloomberg.net Last Updated: October 17, 2008 12:34 EDT
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Apr
14 |
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male, 34 y/o Pho maker |
- How to Blow Your Credit Limit -- Without Spending
- Obama economic plan now tops $900 billion
- Wow! Good News in Housing
- FDIC encourages banks to lend more
- Apple CEO Jobs takes medical leave
- 10 investing basics from Buffett
- Porn industry seeks federal bailout
- Bernanke says another stimulus plan may be warranted
- Buffett Says Now Is the Time to Buy US Equities (Update1)
- Better Than Thai Auto Show
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