Investments // Current

Burnt China cemetery investors won't rest in peace

Dozens of people protested outside an insurance office in Shanghai on Monday, demanding the return of money lost in a scheme... more

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23 days ago

US Billionaire dumps Ford shares

BILLIONAIRE US investor Kirk Kerkorian announced today that he had sold shares in Ford and was considering divesting his whole stake, deepening the gloom around the loss-making auto group.

In a sharp change of strategy, Kerkorian's holding group Tracinda said it had sold 7.3 million shares in Ford for an average price of $US2.43 per share - representing a huge loss for the 91-year-old investor.

Tracinda said it also "intends to further reduce its holdings of Ford common stock, including the possible sale of all of its remaining 133,500,000 shares'' which amount to a 6.09 per cent stake.

"Investors are becoming more pessimistic about the Detroit Three's prospects in the environment of a deepening recession and restricted access to credit,'' wrote an analyst for Economy.com, Sean Maher, referring to the US motor industry giants.

Ford shares closed down 6.87 per cent at $US2.17 in a broadly negative market. They have shed about 65 per cent of their value since the beginning of the year.

Mr Kerkorian built a position in Ford in the early part of the year, announcing in June that he would pay $US8.50 to buy an additional 20 million shares.

The investor, who made a fortune from running and selling Las Vegas casinos, bought the shares in Ford after referring at the time to "meaningful traction in its turnaround efforts''.

At the time, Ford managers said they were on track to deliver profitability in 2009 - an objective that has now been shelved.

Since then, the Detroit giant has struggled to sell its heavy vehicles in its domestic market as consumers struggle with rocketing fuel prices and recent financial turmoil has also hit sales.

For the second quarter, Ford announced its worst loss ever of $US8.7 billion ($12.4 billion) due to hefty charges related to write-downs on the value of its assets and losses from auto leasing.

Ford also risks being left out of expected consolidation in the US auto industry if its two domestic rivals, General Motors and Chrysler, clinch a merger deal as several press reports have recently suggested. BILLIONAIRE US investor Kirk Kerkorian announced today that he had sold shares in Ford and was considering divesting his whole... more

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28 days ago

Metallica Drummer to Sell Basquiat Painting

Lars Ulrich, songwriter and drummer for the heavy-metal band Metallica, is selling a Jean-Michel Basquiat painting from his art... more

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1 month ago

Retirement Savings Lose $2 Trillion in 15 months!

Wednesday 08 October 2008: by: Nancy Trejos, The Washington Post

"As the stock market continues to drop, $2 trillion of Americans' retirement savings has been lost.
The stock market's prolonged tumble has wiped out about $2 trillion in Americans' retirement savings in the past 15 months, a blow that could force workers to stay on the job longer than planned, rein in spending and possibly further stall an economy reliant on consumer dollars, Congress's top budget analyst said yesterday.

For many Americans, pensions and 401(k) plans are their only form of savings. The dwindling of these assets - about a 20 percent decline overall - is another setback just as many people are grappling with higher gas and food prices, more credit card debt, declining home values and less access to loans.

"Unlike Wall Street executives, American families don't have a golden parachute to fall back on," said Rep. George Miller (D-Calif.), chairman of the House Committee on Education and Labor. "It's clear that Americans' retirement security may be one of the greatest casualties of this financial crisis."

Even traditional pension plans, which are formally known as defined-benefit plans and are widely considered more stable, have been hit hard by the stock market's volatility, losing 15 percent of their assets over the past year, Peter R. Orszag, director of the Congressional Budget Office, told the House panel.

Despite the losses, companies will still be obligated to pay out the same pensions promised to employees but will have to recoup the extra costs in other ways, Orszag said. "When pension assets decline in 401(k) plans, the burden is on the workers," he said. "When pension plan assets decline in defined-benefit plans, the burden is on the firm to make up the difference. The firm will have to pass those costs on to their workers, to their shareholders or to consumers."

Defined-benefit plans are company-sponsored programs that provide retirement payouts based on an employee's salary and tenure. The company shoulders the bulk of the investment decisions and risk. Defined-contribution plans, such as 401(k)s, turn those tasks over to the worker and are subject to the whims of the stock market.

Increasingly, employers have switched workers into defined-contribution plans. The federal government has also pushed 401(k) plans heavily, approving a law late last year that makes it easier for employers to automatically enroll their employees in them and other similar retirement plans."
Story continuned at link above.Wednesday 08 October 2008: by: Nancy Trejos, The Washington Post "As the stock market continues to drop, $2... more

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1 month ago

Investors Stampede To Alpacas

The investor trend is shifting from stocks to more tangible assets like -comic books, alpacas, champagne and gold.

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1 month ago

How to keep your money Safe

In light of the crash on Wall Street, its a good idea to take another look at your investments...

Trouble on Wall Street is affecting all of us on Main Street. And a lot of you are probably asking the same question we are: "What should I do with my investments?" To find out, I sat down with Certified Financial Planner Gary Cotter and asked him about the major investment accounts that most of us have.

What should people do with their 401K’s and IRA's? Cotter says for the most part, even if your portfolio took a hit, leave it alone.

"The temptation is when the market gets like this is to stop the contributions and that's the worst thing you can do. The mentality should be the stuff that I was buying last month, last year is actually still good but it's on sale” Cotter says.

Of course, what you do or don't do will depend on your age. If retirement is only a few years away, you should consider less risky investments. If you've got 20 years to retirement, Cotter says keep funding those 401ks.

The same principal holds true for those 529 college investment funds. How you invest will depend on the age of your child. "Some of the 529’s actually have age weighted portfolios which actually become more conservative as the child approaches age 18 and if you're doing that probably everything is just fine” Cotter says.

Will this impact your pension? Cotter says now is a good time to check in with your company to make sure they’re funding those accounts.

"It's up to the company to fund that pension so that the promise can be delivered on if the investments don't do well than the company has to put in more money. ...that becomes a problem if the company doesn't have any more money” Cotter says.

What about my variable annuities that are tied directly to insurance companies, like AIG? Cotter says the make sure you know the type of annuity you have.

"The money market account is segregated from the assets of the insurance company so it's not subject to claims of insurance companies creditors if they run into trouble. The fixed account is an asset of the insurance company.” So, creditors could, in theory, take over that money. But Cotter adds annuities are protected, to certain extent, by the state of Florida’s life insurance fund.In light of the crash on Wall Street, its a good idea to take another look at your investments... Trouble on Wall Street is... more

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1 month ago

Citigroup posts $2.5B loss, but beats expectations

Citigroup has become the latest big bank to quell Wall Street's worries about a financial sector implosion, posting a $2.5 billion second-quarter loss that was smaller than expected.

Citi rose nearly 9 percent Friday and helped lift other financial stocks, having joined JPMorgan Chase & Co. and Wells Fargo & Co. in convincing investors that the prognosis for the sector, while gloomy, may not be as dire as the market feared.

But it's hard to get too enthusiastic about clearing a low bar. It was Citi's third straight quarterly loss and neither JPMorgan nor Wells Fargo managed to notch a profit gain compared to last year. Meanwhile, the brokerage Merrill Lynch & Co. reported a wider-than-expected quarterly loss. And next week, Wachovia Corp. and Washington Mutual Inc. are anticipated to reveal losses, too, with Bank of America Corp. expected to report a steep profit decline.

"I don't think anyone's breathing too easily right now," said Prakash Shimpi, who works in the risk management practice at Towers Perrin. Determining the dollar value of certain assets backed by debt is still a tricky process, he said, even a year after the crisis began.

Citigroup, the nation's largest banking company by assets, lost the equivalent of 54 cents per share in the April-June period. In the same timeframe last year, the bank earned $6.23 billion, or $1.24 per share.

The shortfall was tamer than the 66-cent-per-share loss that analysts, on average, were expecting, according to Thomson Financial.

Citigroup Inc.'s securities and banking division wrote down the value of its assets by $7.2 billion, before taxes, and an asset revaluation cost its consumer lending business $745 million. Those write-downs totaling about $8 billion are significantly lower than write-downs taken in the first quarter and in last year's fourth quarter.

However, credit costs jumped to $7.2 billion as more consumers defaulted on their loans — implying that while losses in the credit markets are decelerating, losses from actual defaults in Citigroup's mortgages, home-equity loans, auto loans and credit card lines are mounting. The $7.2 billion in credit costs included $4.4 billion in credit losses and a $2.5 billion charge to bulk up reserves for future loan losses.Citigroup has become the latest big bank to quell Wall Street's worries about a financial sector implosion, posting a $2.5... more