January / February Newsletter
Out of the Box in 2008
Compiled by Guy Baker
The stock market’s performance during the early weeks of January has certainly not warmed investors’ hearts. Volatility and losses marked many of the trading days.
What’s more, January has not been without remarkable events, nothing more striking than the Federal Reserve’s 75 basis point drop in the benchmark interest rate on January 22, 2008, 25 points more than anticipated. An old wives tale is that “as the first five days of January go, so goes the year.” That’s one of many “trading rules” popular among technical investors, who believe profitable trades can be made by interpreting correctly the patterns in various market indicators. But another trading rule is markets rise in presidential election years. The conflict between these signals about potential stock performance in 2008 demonstrates only that when it comes to technical analysis, it is probably better to pick your position first and then . . . .
Planning for Catastrophic
Health Care Expenses
A good financial plan should address the possibility of catastrophic health care expenses. After that possibility has been considered, the next question is how to pay for it. Your health or Medicare insurance pays the hospital & doctors’ bills should you become sick or have an accident. Your disability insurance will replace all or a portion of your income should you not be able to work as a result of that accident or illness. Neither of these insurances will pay the +$70,000/year it can cost to hire someone to take care of you in your home or a nursing home. Only long-term care insurance . . .
The Cost of Immediacy
The inclusion of the ask-bid spread in transaction costs can be understood best by considering the neglected problem of "immediacy" in supply and demand analysis.
Predictable immediacy is a rarity in human actions, and to approximate it requires that costs be borne by persons who specialize in standing ready and waiting to trade with the incoming orders of those who demand immediate. . .
ARE MONEY MARKET MUTUAL FUNDS HEADED FOR TROUBLE
Jitters in the credit markets due to fallout from the sub-prime mortgage mess have spread to that bastion of perceived safety, the money market mutual fund industry.
Should investors be concerned? . . .