Elections 2011

What does the new Congress mean for your investments?

Maybe it's a little early to prognosticate. Investors are going to have to wait to see more specifics from the new Congressional leaders. And there's a two-month lame duck Congress to get through before the new team takes charge. We don't even know if the Bush tax cuts will be extended beyond Dec. 31 -- and, if so, for how long.


More from WSJ.com:

• What a Republican Win Would Mean for Investors

• Stocks: Are Small Investors Too Late to the Party?

• Warning: Retirement Disaster Ahead


But I'm not one to hang around. And if investors want to look ahead, they're not completely blind. We have two sets of clues: History, and the plan that the Republican leaders themselves laid out nearly two months ago, in their 48-page Pledge to America.

Neither is a perfect guide. But they may not be completely useless. What can they tell us?

THE STOCK MARKET. Unclear. Watch out for anyone who tells you "divided government is good for the stock market." The historical basis for this -- such as data since 1949 via the Stock Trader's Almanac -- is meager. You can't extrapolate universal rules from such a small amount of data. The results are too heavily skewed by the Reagan (1981-86) and Clinton (1995-2001) booms under divided governments. "The mantra that gridlock is good for the markets is not borne out by the evidence," says Bob Johnson, senior managing director at the CFA Institute, a trade organization for professional investors. A case in point: The stock market has gained 40% since the Democrats took full control in Jan. 2009.

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LARGE CAPS. Positive. Yes, the new Congress may be pro-business. But that should favor those who can pay to play. That means big companies with cash, clout and contacts. Think: Big oil, pharma, and the Wall Street banks. Large companies boomed following the "Republican Revolution" of 1994. Large companies also have other advantages for investors today. After years of underperforming small caps, many of them look reasonably priced. Those with big dividend yields should benefit from extensions of the Bush tax cuts, which favor dividend income. And large companies are most able to benefit from overseas growth and a weaker dollar (more on that below).

SMALL CAPS. Unclear. They should benefit if the Republicans follow through on plans for lighter regulations and a small business tax cut. But the biggest issue for them remains the domestic economy, still burdened by high unemployment and heavy debts. According to the Pledge, the new Congress plans to axe any remaining stimulus and cut back on discretionary spending. Will this austerity help the domestic economy in the short-term? Hardly. Look at Ireland, where the economy is in freefall. A further headwind for small cap investors: The stocks have already outperformed for a decade. The cycle may be due to turn.






.......I too think it is way too early to figure out who WON this election. With talk of a Lame Duck session and chaos amongst the ACTUAL Republican (bill voting) Party, we will just have to wait and see what happens in January.
I do say that the NEWly elected have done damaged to Ranking Dems on BIG committee's and with this causes a big PAUSE in the bill making process, I just hope the Repblicans put together complete simple bills that America Can READ and let us understand what is going on in D.C......
Because that is what I think America voted on, Complete Confussion!

To many people voted for Obama with the hopes and dreams that he would ride into the government and sprinkle his magic and be the white knight in shinning armour that we have been waited for. I have heard people compare Obama to John Wayne. Although, unfair many people have hoped that Obama would be the answer and would pull the United States out of its debt/war/health care issues/poverty and every other bad concern that faces the average American citizen. After watching people vote, and observing the outcome, it just goes to show you that when one person puts so much hope and faith in ONE PERSON (Obama) then the consequences follow the preceeding elections. How can we as a country unite (both rep/dem/other) to unify our country before we are facing a second recession. (although rumor has it that our recession has ended...hum not so sure where they get their figures on this but I guess if the statics prooves it then it HAS TO BE TRUE? RIGHT!?) This is exsactly why the United States continues to fail, they allow other people (political figures) to represent them and they do not follow through with their promises of a better future. So if you really want to make a difference then do it. Don't wait for the statistics to explain the economy, study it and make decisions that could if nothing else benefit you during this hard time.

American Airlines

American Airlines parent AMR posts 3Q profit - Yahoo! Finance

How ironic that it is AMERICAN Airlines and yet most of their revenue is from over sea traveling. I wonder if a company would be able to benefit and receive more revenue if they expanded their services to local airports and not just the five key U.S. markets: L.A., New York, Chicago, Miami and Dallas. There are many businesses that could utilize the airline if it was more marketable in other cities such as state capitols (i.e. Springfield, Il) so not only the corporate world could use the airlines but also vacationing passengers as well.

Some of American Airlines rivals (Delta, Southwest) are already taking advantage of the vacationing travelor as well as international flights. Maybe this could help with American Airlines to produce more revenue and keep up with its rival competitions.

France warns of high terror risk in Britain

Wed Oct 6, 7:59 am ET
PARIS – France's Foreign Ministry is warning travelers of a high terrorism risk in Britain and asking them to be cautious in the country's crowded tourist areas.

A message posted on the ministry's Web site late Tuesday says British authorities believe "that the level of terrorist threat is very high in the United Kingdom and the risk of an attack is very likely."

The ministry's message recommends that travelers in Britain exercise "extreme vigilance in public transport and busy tourist sites." France has not issued any recent warnings for other European countries.

France and many other countries in Europe have stepped up terrorism alert vigilance recently amid what has been described as an abstract though heightened threat.

The French warning was issued before gunmen fired a rocket at a convoy carrying Britain's No. 2 diplomat in Yemen on Wednesday, wounding four people amid heightened fears about al-Qaida influence in the country.

There was no immediate claim of responsibility for the attack. In a separate incident in Yemen the same day, a gunman shot and killed a French citizen working for Austrian oil and gas company OMV.

Security officials have said terrorists may be plotting attacks in Europe with assault weapons on public places, similar to the deadly 2008 shooting spree in Mumbai, India.

European officials have provided no details about specific targets, though security has been boosted in many bustling public places — for example, at Notre Dame Cathedral and the Eiffel Tower in Paris.

The French Foreign Ministry's message came after Britain's Foreign Office warned travelers to France and Germany of a high terror threat. A U.S. State Department also advised American citizens living or traveling in Europe to take more precautions about their personal security.


Ok, so is this terror threat to break down the European economy or is it something that people should avoid at all risk. After reading about the various "threats" and shootings that have been happening over the recent time, I believe that people should not stop traveling to Europe, but do it with caution as though it was any other trip that you would take. Every action has a consequence, even if there was no terrorist threat, you could still have a faulty airplane engine. This breakdown will affect the European economy and throw the countries into a recession due to lack of revenue being exchanged.

What It Is, If no longer called a Recession

What It Is, If It's No Longer a 'Recession' - Yahoo! News

I have a question, how can it be a recovery if it's unemployment is higher than its unemployment during the recession? I don't see any indication according to what Economists believe to be a recession, containing positve growth and change.

"In economics, a recession is a business cycle contraction, a general slowdown in economic activity over a period of time.[1][2] During recessions, many macroeconomic indicators vary in a similar way. Production as measured by Gross Domestic Product (GDP), employment, investment spending, capacity utilization, household incomes, business profits and inflation all fall during recessions; while bankruptcies and the unemployment rate rise" (Wikipedia)

So if we go according to this definition, where is the growth in economic activity over the past year? I don't see the evidence that supports the concept that our country is no longer in recession but rather in "recovery."

Midwest to suffer gas prices

KOB.com - Oil drops on economic news; crude supplies decline

After the Midwest pipeline busted going from Michigan to Indiana consumers in the Midwest suffer the mark up on the barrel of oil. The oppritunity cost that consumers endure because of the pipeline breaking is the extra money spent on gas prices that could have bought food, clothing, or paid for your child's haircut.

I want to watch how the barrel of gas effects the travel industries within the Midwest over the duration of the increase at the pump.

9/11

Nation & World | The World Trade Center complex is rising rapidly | Seattle Times Newspaper

I wonder if the United States would have invested in the infrastructure prior to the terroist attack would that have saved the lives of the many who died 9/11/01? Why did the US overlook this possibility would constructing the first WTC. Is this new WTC respecting the lives of those who remain in the rubble or is it digging the graves deeper?

strategies-to-reduce-taxes-on-social-security: Personal Finance News from Yahoo! Finance

strategies-to-reduce-taxes-on-social-security: Personal Finance News from Yahoo! Finance: "Strategies to Reduce Taxes on Social Security
Sponsored by by Rachel L. Sheedy
Wednesday, September 1, 2010

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EmailPrintYou worked hard all your life, paying into the Social Security system. Now you're ready for payback time. Not so fast. Uncle Sam may want a piece of your benefits. Up to 85% of Social Security benefits may be subject to federal tax, but tax planning can help ease the pain.
More from Kiplinger.com:

• Secrets to Maximizing Social Security

• Quiz: Test Your Social Security IQ

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The tax hit will depend on your income and marital status. First figure your modified adjusted gross income, which includes non-Social Security sources of taxable income, such as pensions, wages, interest and dividends. Add in tax-exempt interest and certain other exclusions from income. Itemized deductions won't help you in this calculation, says Robert Seltzer, a certified public accountant in Beverly Hills, Cal.
Next add one-half of the Social Security benefits you receive for the year — the total is your 'provisional income.' Then look at the IRS's 'base amounts' for taxing Social Security. The base amounts are $32,000 for married couples filing jointly and $25,000 for single filers."

In the previous blog I discussed how if the focus of the nation was towards taxing and raising revenue for the United States instead of censoring the country would not be in a recession. However, this idea of taxing social security has taken it a little to far. Social Security income has already been taken from you as a trade off for an exchange of a benefit at a later date for using your services (income) now. At what point will the U.S. government censor how far they are allowed to execute any law?

Yahoo! Finance - Business Finance, Stock Market, Quotes, News

Yahoo! Finance - Business Finance, Stock Market, Quotes, News: "Craigslist removes adult services section- AP
Craigslist appears to have surrendered in a legal fight over erotic ads posted on its website, shutting down its adult services section Saturday and replacing it with a black bar that simply says 'censored.'"

If the United States could spend less time censoring and focus more on taxing and earning revenue for the country we would not be in as much debt.

bus 501

bus 501

Market failure

Only the rulers of Cuba, Venezuela, Iran and some ideologues in the west condemn capitalism. Empirically minded people know that there is no good alternative. However, capitalism takes many forms and evolves over time. The questions to ask, then, are “What capitalism?” and “Does the present crisis shed new light on this issue?”

The popular condemnations of “greed” in response to the crisis seem to me superficial. Economists are expected to explain human behaviour in terms of situational factors and not to compete with preachers and politicians. Equally unconvincing is the speculation about what John Maynard Keynes would be saying were he alive.

As a preliminary step to a more productive analysis, let us recall that not long ago Japan Inc, the Rhineland model and other statist or corporatist varieties of capitalism were praised as a better alternative to the more market-oriented Anglo-Saxon variant of this system. Since then, based on solid empirical research, there has been a wave of deregulation of the product and labour markets, and the European Union has set itself the ambitious goals of the Lisbon Agenda.

Faced with high structural unemployment, fiscal pressures and ageing societies, many western economies have started to reform their over-extended welfare states. China and India have accelerated their growth thanks to a reduction in the political control of their economies. Central and eastern European countries show that the more market reforms you accumulate, the faster is your longer-term growth. These and other initiatives have reduced the crippling statist bias and extended the role of markets and civil society. The present crisis means we must take further measures to release entrepreneurial capitalism, offsetting declines in gross domestic product caused by the financial crisis and the legacy of attempts to manage it, especially the hugely increased public debt.

But is the financial sector an exception? Can the crisis be interpreted as a pure market failure, which requires more public intervention? It is easy to agree on the facts – increased leverage and asset bubbles in many economies, as well as serious errors made at the top of huge financial conglomerates. Symptoms, however, should not be confused with causes, and it is with respect to the causes that there is serious disagreement.

The argument that we have witnessed a pure market failure fails the most elementary tests. Financial institutions and markets operate within the macroeconomic, regulatory and political framework created and maintained by public bodies, and it is empirically not difficult to point to the serious deficiencies of this framework that contributed to the present crisis.

There is scope for further analysis of the relative contributions of the US Federal Reserve’s easy monetary policy in the early 2000s and the “savings glut” in some emerging economies. With a more restrictive Fed policy (and with more disciplined fiscal policy under George W. Bush, the former US president), there would have been initially slower growth but less increase in the savings glut later, a smaller build-up of financial imbalances and, as a result, less disruption to growth.

Excess liquidity encouraged the spread of powerful short-term incentives in the financial institutions. Fannie Mae and Freddie Mac were largely the tools of political intervention in the US housing market. Some financial regulations might have accelerated the spread of the originate-to-distribute model, which is blamed for amplifying leverage and obscured the allocation of risks. Those EU economies that developed the most extreme housing bubbles – Britain, Ireland, Spain – stimulated demand for housing with tax breaks.

Analytically based lessons from the present crisis should focus on revisions of the macroeconomic and regulatory frameworks for financial markets that would reduce the risks of dangerous booms and the resulting busts. Policies that contribute to the emergence and growth of huge financial conglomerates – which, once in crisis, endanger the financial stability of whole countries – should be identified and eliminated.

These proposals have nothing to do with grandiose schemes for reinventing market capitalism. However, every crisis produces a shock to mass beliefs and thus may have policy consequences. In a democracy, the impact of economic crises is mediated by competing interpretations provided by intellectuals and politicians, and conveyed by the media. There is a risk that empirically dubious but emotionally attractive interpretations, which condemn markets and call for more statism, could gain ground. This would damage longer-term growth in the affected countries and could have serious geopolitical consequences if major western economies, especially the US, already burdened by the legacy of the crisis, were to succumb while China continued its reforms.

Mises, Hayek, Schumpeter, Nozick and other thinkers have noted that under democratic capitalism there are always influential intellectuals who condemn capitalism and call for the state to restrain the markets. Such an activity bears no risk and may be very rewarding. (This contrasts strongly with the consequences of criticising socialism while living under socialism.)

Dynamic, entrepreneurial capitalism has nowadays no serious external enemies; it can only be weakened from within. This should be regarded as a call to action – for those who believe that individuals’ prosperity and dignity are best ensured under limited government.

Focus on Lifelong Investing » Building Wealth » 10 Investment Mistakes to Avoid

10 Investment Mistakes to Avoid

Sponsored by by Jennifer Saranow Schultz
Tuesday, August 31, 2010
Jerry Miccolis, co-author of “Asset Allocation for Dummies” and chief investment officer at the wealth advisory company Brinton Eaton in New Jersey, shared his list of 10 mistakes investors should avoid.

1.) Overlooking the importance of asset allocation: According to Mr. Miccolis, getting asset allocation right is the building block of investing successfully. Many investors, however, skip this step and instead build their portfolio by haphazardly buying securities they like.
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2.) Confusing diversification with asset allocation: Asset allocation goes beyond simple diversification. According to Mr. Miccolis, asset allocation involves picking asset classes (think stocks and bonds) and subclasses/sectors that do not move in synch and then putting the right proportions of each in your portfolio. A portfolio with all stock investments, for instance, probably is not properly allocated.

3.) Neglecting to rebalance regularly: After you set up your initial asset allocation, you need to make sure to keep those allocations on target over time because some asset classes will grow faster than others.

4.) Favoring short-term needs over long-term goals: Rather than focus on short-term goals, invest based on thinking about your long-term goals, income expectations and risk tolerance.

5.) Letting your emotions control you: In these volatile times, it is important to stick with your long-term plan so you do not fall victim to greed and anxiety.

6.) Getting addicted to the financial media: Paying attention to financial news 24-7, according to Mr. Miccolis, will just increase your anxiety, since what the market does in a single day does not matter in the long run.

7.) Chasing performance: Buying the latest hot stock or sector is like “driving a car by looking in the rear view mirror,” Mr. Miccolis said in a statement. Generally, by the time you know it is hot, it is old news and there is not much profit left in it.

8.) Trying to outsmart the market: Studies have shown that active management underperforms passive management in the long term.


9.) Disregarding tax implications while investing: “Common mistakes,” according to Mr. Miccolis, “include putting annuities in an I.R.A., putting tax-inefficient investments like REITs in a taxable account, failing to harvest tax losses and not taking advantage of lower tax rates for long-term capital gains.”

10.) Allowing caution to supersede the reality of inflation: Safe, low-return investments like money funds, C.D.’s and Treasury securities will not keep up with inflation over the long haul. “For most people, inflation is their biggest financial threat over their lifetimes, not what the markets happen to be doing this year,” Mr. Miccolis said.



So in order to be successful in today's society a person's investments are aas much as important and his/her career choice. I have included a list of the top 10 investment mistakes to make. I have never owned a share in a company other than Walmart when I worked there and to be honest I never really knew how to follow the stock market.

Looking at the countries recession, I believe that it is important that an individual take the time to organize, prepare, and make educated investments in order to remain in the working force during the recession process.