CFO Focus — Why Stocks Still Matter

WHY STOCKS STILL MATTER

The market has been hurt, but equities are still important.

If you are retired or nearing retirement, you may have recently directed more of your invested assets into cash, or into bonds, CDs, fixed annuities or other investments outside the stock market. That’s understandable. However, whether you are 65, 45 or 25, there is still a need to grow your money over time. Stock market investment gives you the potential for remarkable growth in a way few investment choices do. Here’s why stocks still matter.

CFO Commentary — A Busy Week

Edited by J. Michael Stolp

Weekly Economic Update for the Week of March 2, 2009

Quote of the week. “Success is the sum of details.”– Harvey S. Firestone

A busy week. President Obama unveiled a federal budget plan to cut the $1+ trillion deficit to $533 billion by 2013. It would include a $634 billion health care reserve fund, return the highest tax brackets to 36.0% and 39.6% in 2011, return the capital gains tax rate to 20.0% in 2011, and make the Making Work Pay and American Opportunity tax credits permanent.¹ The stress test began for America’s 19 biggest banks; any shaky thrifts would be offered 6 months to raise private capital before getting more federal bailout money.² Finally, the Treasury struck a deal with Citigroup to convert up to $25 billion in preferred Citi shares to common shares.³

CFO Focus — How Can You Check Up on an Insurance Company?

HOW CAN YOU CHECK UP ON AN INSURANCE COMPANY?

Ways that life insurance and annuity owners can learn about risks.

Edited by J. Michael Stolp

Read this if you own an annuity or life insurance policy. Read this even if you don’t, because you need to know about the ways you can check up on an insurance company’s rating.

Have insurance companies been exempt from federal bailouts and rescues? No. These are rough times for insurers too. So how can you learn about any risks to a) your policy, b) your annuity, or c) the insurer behind it? And how can you identify the insurance companies that have weathered the recession well?

CFO Commentary — Action, Reaction

Edited by J. Michael Stolp

Weekly Economic Update for the Week of February 23, 2009

Quote of the week. “You don’t live in a world all alone. Your brothers are here too.”– Albert Schweitzer

Action, reaction. The President signed a $787 billion stimulus package into law to help the broad economy. The White House and the Treasury unveiled a $275 billion strategy to aid homeowners. Still, Wall Street shrugged, concerned over the health of banks. It also reacted to the Federal Reserve’s 2009 projections: unemployment of 8.5-8.8% and economic contraction of 0.5-1.3%.¹ While stocks descended, some saw a great buying opportunity.

CFO Commentary — Monthly Economic Update for February, 2009

Edited by J. Michael Stolp. These views should not be construed as investment advice.

Monthly Economic Update for February, 2009

Quote of the month. “Freedom is a possession of inestimable value.”– Cicero

The month in brief. Optimism was evident in America … but not in its financial markets. Wall Street had a tough month, and investors hoped it was not an omen for the year. In Washington D.C., more bold solutions were proposed for lingering economic problems. In the retail, service and manufacturing sector, layoffs occurred again and again. Oil prices sank, and gold prices rose. Mortgage rates stayed comfortably around 5%. Investors hoped that hope would translate to action and confidence in the very near future – with the health of banks the biggest concern.

CFO Focus — America Fights Foreclosures

America Fights Foreclosures

Will Obama’s strategy make a dent in the problem?

Edited by J. Michael Stolp

A day after signing his massive stimulus plan into law, President Barack Obama unveiled a strategy to stem the tide of American foreclosures. Some borrowers and lenders cheered; some housing industry analysts were unimpressed.

When does it take effect? The program officially begins on March 4, when specific terms of homeowner eligibility become available.¹ The strategy has three parts.

CFO Focus — Obama’s Stimulus Plan

OBAMA’s STIMULUS PLAN

A look at where the money goes.

Edited by J. Michael Stolp

On February 17, President Obama signed the 1,071-page American Recovery and Reinvestment Act (H.R. 1) into law. Here are some of the routes the money will take.

>> $287 billion in tax breaks include…

CFO Focus — Bash the Banker?

Edited by J. Michael Stolp

BASH THE BANKER?

Is the berating of America’s banks really warranted?

Leading executives from America’s eight largest banks testified on Capitol Hill February 11, as Congress asked how they spent $165 billion in federal money. Legislators had four questions in mind:

1. Where did the money go?
2. Why aren’t you lending as much as we would like?
3. How challenged for capital are you?
4. Are you really going to be frugal?

CFO Focus — Are You a Future Financial Advisor?

ARE YOU A FUTURE FINANCIAL ADVISER?

Think seriously about exploring this terrific career.

Edited by J. Michael Stolp

It’s a great time to be a financial adviser. Repeat: It’s a great time to be a financial adviser. Even in a bear market, the financial services industry is calling to men and women from all walks of life – from recent college graduates in business and finance to retiring executives and managers.

If you’re in your forties or fifties, you may have thought once or twice about exploring another career. Maybe you could make more money doing this or that. Perhaps you are being forced to find another line of work due to the economy. Well, it might interest you to know that

CFO Focus — TARP’s Past, Present & Future

TARP’s Past, Present & Future

The next $350 billion is ready to be released.

What did the first $350 billion accomplish?

Edited by J. Michael Stolp

What has the Troubled Asset Relief Program done for the financial sector? How was the first half of the TARP money spent? Where will the second half go? It’s time for a quick peek at TARP past, present and future.

CFO Commentary — Monthly Economic Update for January 2009

Monthly Economic Update for January 2009

Edited by J. Michael Stolp.  These views should not be construed as investment advice.

Quote of the month. “The future depends on what we do in the present.”– Mahatma Gandhi

The month in brief. At the start of December, it became official: America had been in a recession for 12 months. Some leading economic indicators provided further confirmation. It was a month of descents. Interest rates came down to record lows. Oil prices and retail gasoline prices sank to the levels of a few years ago. Mortgage rates fell way down. (However, the real estate sector looked even unhealthier than previously assumed.) GM and Chrysler got bridge loans from Washington, D.C. and GMAC was bolstered by a cash infusion from the federal government. As America prepared for a new presidency, investors anticipated a better year on Wall Street.

CFO Focus — Little Ways You Might Improve Your Financial Life

LITTLE WAYS YOU MIGHT IMPROVE YOUR FINANCIAL LIFE

Some things to think about this year – and every year.

Edited by J. Michael Stolp

This is the year! Yes, you can make 2009 the year you alter your financial life for a better financial future. Let’s look at some steps you might think of taking with the goal of financial freedom in mind.

No, we’re not talking about those ridiculously obvious steps the usual articles recommend, like “write your goals down” and “set a budget”. Let’s go past the clichés and get into the real issues.

CFO Commentary — Quarterly Economic Update for 4Q 2008

Edited by J. Michael Stolp

Quarterly Economic Update for 4Q 2008

Quote for the quarter. “Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has.” – Margaret Mead

The quarter in brief. Was that the worst of it? Maybe that is what the fourth quarter of 2008 represented – the trough of a very rough recession. Some economists feel that way. Wall Street endured some serious pain in the fourth quarter. On November 20, the S&P 500 closed at 752.44, a low unseen since 1997; the Dow Jones Industrial Average closed at 7,552.29.¹ Only 14 months earlier, both indices had hit all-time highs. Fortunately, the S&P 500 and the DJIA respectively ended the year at 903.25 and 8,776.39; Santa Claus was a little late, but the DJIA did pull off a 284-point rally across December 30-31.²

CFO Focus — Money & Happiness

MONEY & HAPPINESS

Do they go hand in hand?

Does money actually buy a degree of happiness? In this recessionary holiday season, it is worth thinking about the effect money has on our lives. What role does money play in our happiness? Is that role overrated?

Most psychologists and sociologists will tell you that our happiness comes largely from social interaction. But studies indicate that there is a direct correlation between wealth and a kind of mental health.

As Pearl Bailey immortally quipped, “Honey, I been poor, and I been rich. And let me tell you, rich is better.” Having a well-paying job, being successful at what you do – these are definite cornerstones of self-esteem and contribute to happiness.

CFO Focus — A time to “do well by doing good”

AN IRA GIFT CAN REDUCE YOUR TAXES
The IRA charitable rollover is back for 2008 and 2009.

A time to “do well by doing good.” If you dislike taking Required Minimum Distributions (RMDs) from your IRA or want to improve your tax situation, you might want to explore an IRA charitable rollover. It is back, as a bonus of the Emergency Economic Stabilization Act of 2008. The IRS officially calls it a Qualified Charitable Distribution (QCD).

CFO Commentary — Mortgage Help on Way & New Wrinkle in TARP

Weekly Economic Update for the Week of November 17, 2008

Quote of the week.“Never tell people how to do things. Tell them what to do and they will surprise you with their ingenuity.” – Gen. George S. Patton

CFO Focus — Let’s Talk About Capital Gains

LET’S TALK ABOUT CAPITAL GAINS
In a down market, things are a little different – and some investors might qualify for a tax break.
Provided by J. Michael Stolp

For seasoned investors, the end of the year equals loss-harvesting time. The classic tactic works like this:

1. You sell some losers to offset some winners, i.e., you sell some securities that are worth less than what you originally paid to counterbalance capital gains you accumulated earlier in the year.
2. With your net gains at $0, you can then harvest up to another $3,000 of capital losses to offset up to $3,000 worth of ordinary taxable income.
3. Beyond that, you can carry over additional capital losses to the following tax year.¹

Well in 2008, we have a different situation on our hands. You might have little or no capital gains this year. Should you sell your losers even when you don’t have many winners?

CFO Focus — So, just how will you pay for long term care?

HOW LTC INSURANCE CAN HELP PROTECT YOUR ASSETS
Create a pool of healthcare dollars that will grow in any market.
Provided by J. Michael Stolp

How will you pay for long term care? The sad fact is that most people don’t know the answer to that question. But a solution is available.

As baby boomers leave their careers behind, long term care insurance will become very important in their financial strategies. The reasons to get an LTC policy after age 50 are very compelling.

CFO Focus — Can you withdraw money from your 401(k) while you are still employed?

IN-SERVICE 401(k) WITHDRAWALS & INCOME PLANNING
An option you can use to develop your retirement income plan while you work.
Provided by J. Michael Stolp

Can you withdraw money from your 401(k) while you are still employed? Not everyone should; not everyone can. However, if you can, it may mean that you can effectively implement part of your retirement income plan before you retire.

CFO Commentary — U.S. unemployment hit its highest level since 1994

Weekly Economic Update for the Week of November 10, 2008

Quote of the week. “Committing a great truth to memory is admirable; committing it to life is wisdom.” – William Arthur Ward

Jobless rate: 6.5%. U.S. unemployment hit its highest level since 1994 in October; 10.08 million Americans were jobless, the most in a quarter-century. The rise from September’s 6.1% figure may inspire yet another interest rate cut. Some economists think the Federal Reserve will make a quarter-point or half-point cut at or before its December 16 policy meeting.¹

CFO Focus — Why You Should Keep Contributing to Your 401(k)

WHY YOU SHOULD KEEP CONTRIBUTING TO YOUR 401(k)
A down market is no time to pull your money out or cut contributions.
Provided by J. Michael Stolp

With the way the market is behaving, you may be tempted to pull money out of your 401(k) right now or greatly reduce your contributions. If you’re considering such a move, please reconsider it.

CFO Focus — Is an Election Year Good for Stocks?

PRESIDENTIAL ELECTIONS AND STOCKS
How has the market reacted to elections and new administrations; Some interesting statistics from election years past and present.
Provided by J. Michael Stolp

Is an election year good for stocks? Well, let’s look at some data. Keep in mind, it’s only data – and as the old saying goes, past performance is no indication of future results. But the statistics concerning the Dow Jones Industrial Average sure are interesting. It is time to compare and contrast.

CFO Perspective — Civic Mindedness & Helping One’s Profession

We encourage CFO folks to make contributions of time, talent and resources to the profession and to the community.

For example, one of my recent projects is to contribute occasional articles and consulting to the Arizona Society of CPA’s Weblog.  The effort not only enchances the profession but also provides a fun format to contribute.

Here are links to three social networking sites for the ASCPA.

— J. Michael Stolp
— My Info
— See Disclaimer

CFO Provides Parallel Feeds for Doctors

CFO X-ray$ Weblog and CFO-Doctors’ Newswire provide dual tracks of interest to Doctors and their advisers.

Both services are integrated one with the other, and complement one another.

CFO X-ray$ Weblog provides Snapshots & Perspectives of economic issues facing Doctors and their advisers.

CFO-Doctors’ Newswire provides a newsfeed from the general and financial media of articles of financial and economic interest to Doctors

— J. Michael Stolp
— My Info
— See Disclaimer

CFO Focus — Roth IRA Conversions in a Down Market

ROTH IRA CONVERSIONS IN A DOWN MARKET
Here’s a year-end move you might want to consider.
By J. Michael Stolp

Is it time for a break – that is, a tax break? With the stock market down 25-40% from its fall 2007 highs, it’s certainly a time to consider converting your traditional IRA to a Roth IRA, especially if you’re not planning on retiring soon. You will pay a one-time tax on the conversion … but with the market down, that tax will be less than you would have paid last year. As a result of the conversion, you will have more flexibility with your money when you are ready to use it.

CFO Perspective — A Super Tuesday renews a lot of hope

IS IT TIME TO MOVE CASH INTO EQUITIES?
Are we looking at a great buying opportunity?
By J. Michael Stolp

A super Tuesday renews a lot of hope. October risked being the worst month for stocks in decades until the amazing rally on October 28. Tuesday, the Dow Jones Industrial Average had its second biggest point gain ever, rising a mindblowing 889.35 (10.88% in a single trading day). The NASDAQ soared 143 points (9.5%).¹ The S&P 500 also notched its second-biggest point gain Tuesday (92 points, or 10.79%).² All this had investors hoping that some kind of bottom had been reached … but history would seem to indicate otherwise.

CFO Perspective — The One Percent Solution

FED CUTS RATES TO 1.0%
Another major cut, and a (mostly) minor market reaction.
By J. Michael Stolp

As expected, a 50 basis point cut. On Wednesday, October 29, the Federal Reserve reduced the benchmark U.S. interest rate half a point to 1.0%, by a unanimous 10-0 vote of the Federal Open Market Committee. The FOMC also voted 10-0 to lower the discount rate half a point to 1.25% (the interest rate banks pay on direct loans from the federal government).¹

CFO Perspective — What is the meaning of Tuesday’s amazing rally?

DOW JUMPS 11%
What is the meaning of Tuesday’s amazing rally?
By J. Michael Stolp

Was it a relief rally, a buyer’s market, or … a turning point? Investors smiled Tuesday as stocks went wild. The Dow Jones Industrial Average gained 10.9% to finish Tuesday at 9,065.12. The S&P 500 climbed 10.8%, finishing at 940.51. The NASDAQ also gained an impressive 9.5%, rising to 1,649.47. The Dow rose 889 points, the second biggest single-day point gain in its history (falling short of only the 936-point leap we saw on October 13).¹

CFO Focus — Fixed Indexed Annuities have become popular alternatives to Bonds

FIXED INDEXED ANNUITIES
These conservative investments have become a popular alternative to bonds.
By J. Michael Stolp

Fixed indexed annuities can be very useful investments. As the name implies, FIAs are fixed annuities linked to the performance of a stock market index (often the S&P 500). Because of this stock market exposure, they can sometimes bring conservative investors very nice returns – often, considerably better returns than CDs, bonds, or money market accounts. They really aren’t designed to outperform the stock markets; they are designed to outperform the fixed markets.

CFO Perspective — Self Care in the After Shock

Fear, Caution and Opportunity
Some thoughts about taking personal responsibility for self-care in the after shock
By J. Michael Stolp

First, the bad news. As we put pen to paper on October 28th, the S&P 500 is off approximately 20% so far this month alone. It is down almost 41% from its closing peak on October 9, 2007. Over the past few weeks, equity investments of any kind have been hit, in some cases very hard. Some of the managers with the best long-term records have been hit hardest, down more than 50% since last October’s market peak. When you open your account statements in the coming weeks, it’s not likely to be a pleasant experience.