Press Esc to close

Welcome to Money Morning - Only the News You Can Profit From.

Close

Is Your Vehicle on the "Most Hackable" List?

My first car was a bone-stock 1929 Ford Model A coupe that has been in the family since it was new.

My late grandfather – a machinist on the Lehigh Valley Railroad – drove the car as his everyday vehicle until the late 1940s. My Dad restored the car in his mid-teens and drove it through his high-school years.

And I did the same…

  • Featured Story

    Five "Extra" Moves to Make Right Now to Protect Your Financial Future

    I hear from countless investors around the world every week. Many of them want to know what "else" they can do to protect their financial future, especially now that the markets could get ugly (again).

    Here are a few quick thoughts:

    1) Chart your course

    A surprising number of investors tell me that things were going along just fine then - boom - one day they woke up and everything had turned into a disaster.

    If only it were that simple. The truth is digging a hole takes time and a whole lot of effort. If you're in trouble now it's because you haven't been paying attention for a while.

    Knowing what to do is only 10% of the game. The other 90% comes from having a plan.

    I don't care if it's nothing more than on the back of an envelope or a Post-it like the ones that cover my desk. It's vitally important you have one.

    Unfortunately, "Beating the S&P 500" doesn't qualify as a plan. Neither does "retiring in style." You have to plan for real-life goals.

    For some people, this may be paying for a grandchild's education. For others it might mean building up $20,000 over five years to take that once-in-a lifetime trip, accumulating $300,000 to build a vacation home, or ensuring that you have $2,000-$10,000 a month to live on 20 years from now.

    You have to be specific. That way you learn to control your money before it controls you. If you need help, find a competent financial advisor immediately and ask the right questions.

    If you realize you can meet your goals by hitting singles, it makes no sense to constantly swing for the fences and risk striking out. Lower your risk and concentrate on the return of your money rather than the return on your money.

    Not only will you sleep better, but chances are your returns will be more consistent for having done so.

    2) Refinance your home (and everything else, too)

    Interest rates have fallen for more than 30 years to near zero. They are unlikely to fall much further. If anything they are likely to rise. Nobody knows exactly when or how high they will rise, but that's not the point.

    What's important to realize (and that many people have forgotten) is that the median 30-year mortgage rate is nearly 9%, or roughly 150% higher than the best rates available today. Even a minor uptick means you will lose huge amounts of purchasing power.

    Obviously you have to pay closing costs every time you refinance, but the fees can be worth it if you plan to be in your house long enough to break even.

    Here's how to run the numbers.

    To continue reading, please click here...
    Read More...
  • Credit

  • Banks Catch a Break with Long Timeline for Implementing Basel III Regulations Global regulators on Sunday agreed on new banking capital requirements - known as Basel III - that were much less severe than expected, boosting global financial stocks as investors were optimistic about banks' ability to comply.

    The Basel Committee on Banking Supervision agreed on new rules that will more than triple capital requirements to give banks a bigger cushion against losses. Banks will have to raise the amount of common equity they hold to 7% of assets, up from 2%.

    While the increase seems steep, regulators compromised on the... Read More...
  • Money Morning Mailbag: Small Business Owners Find Hope in Big Banks' Lending Promises Larger financial institutions are increasing loans to big companies, but small business owners are still feeling the credit crunch.

    U.S. Federal Reserve Chairman Ben S. Bernanke noted at a lending conference in July that there was a serious gap developing between large businesses that were building up cash and smaller ones still unable to get credit, and blamed tight credit for preventing small businesses from hiring.

    "Making credit accessible to sound small businesses is crucial to our economic recovery," Bernanke said at the conference.

    According to the National Small Business Association's 2010 Mid-Year Economic Report, 41% of small businesses were still having trouble obtaining credit in July.

    Read More...
  • Has the U.S. Lost its Grip on the Credit-Rating Business? There's a new name in the credit-rating-agency business these days: It's Dagong Global Credit Rating Co. Ltd., and this Beijing-backed business is China's bid for a spot in the global-credit-rating oligopoly.

    And Dagong's Chairman Guan Jianzhong doesn't think much of his long-established U.S. competitors.

    "The Western rating agencies are politicized and highly ideological and they do not adhere to objective standards," Jianzhong told The Financial Times earlier this month.

    Is he right? And does the newly passed Wall Street Reform and Consumer Protection Act correct their flaws, or does it make matters worse? It's a question that affects all investors - even those of us that don't invest in bonds, as we'll soon see.

    To understand how credit-raters will influence investments going forward, please read on...

    Read More...
  • Question of the Week: Readers Respond to Money Morning's Credit Score Query More Americans than ever before are seeing their credit score slip to the subprime level, according to a new report released last week by credit-scoring firm Fair Isaac Corp. (NYSE: FICO). That means it's going to get a lot tougher for U.S. consumers to borrow money - especially given that banks are becoming more and more reluctant to lend.

    "It's hard to see the good news in this report, unless you are speaking for the payday lenders, title lenders, and pawn stores," said John Ulzheimer, president of consumer education at Credit.com.

    The FICO report shows that 25.5% of consumers - or nearly 43.4 million people - have a credit score below 600, putting them in the subprime realm. That makes them a high risk for lenders and means they'll have a tough time getting a credit card, mortgage or auto loan under stricter lending standards.

    Read More...
  • We Want to Hear From You: Are You Taking Care of Your Credit Score? More Americans are seeing their credit score slip to its lowest level ever, according to a new report released this week by credit-scoring firm Fair Isaac Corp. (NYSE: FICO). That means it's going to get a lot tougher for U.S. consumers to borrow money - especially given that banks are becoming more and more reluctant to lend.

    "It's hard to see the good news in this report, unless you are speaking for the payday lenders, title lenders, and pawn stores," said John Ulzheimer, president of consumer education at Credit.com.

    The FICO report shows that 25.5% of consumers - or nearly 43.4 million people - have a credit score below 600, putting them in the subprime realm. That makes them a high risk for lenders and means they'll have a tough time getting a credit card, mortgage or auto loan under stricter lending standards.

    Another 9.5% of consumers have "fair" credit scores in the 600-649 range, which is still considered subprime. With "fair" scores, they're likely to need to seek loans, but may not be able to find one.

    Read More...
  • AIG Bailout Second-Guessed by Government Watchdog A bipartisan Congressional watchdog panel reviewing the government's bailout of American International Group Inc. (NYSE: AIG) has raised doubts about whether U.S. taxpayers "will ever be repaid in full," and concluded that the U.S. Federal Reserve didn't act aggressively enough during the 2008 rescue.

    In a lengthy report, the Congressional Oversight Panel also said the bailout had a "poisonous" effect on the U.S. financial system because it demonstrated the government would protect Wall Street firms from their own risk-taking.

    The Federal Reserve could have acted earlier to find a privately funded solution for New York-based AIG before deciding on a rescue that transformed banks' financial bets into fully guaranteed government obligations, the panel said.

    Read More...
  • Stock Market Strategies for the Post-Financial-Crisis 'New World Order' For many investors, the recent thousand-point plunge by the U.S. stock market was probably the proverbial last straw.

    So let me be perfectly clear about the point that I want to make here: Sitting on the sidelines could be the investment mistake of a lifetime. The post-financial-crisis "new world order" that's emerged from the speculative excesses, recessionary realities and regulatory breakdowns of recent years has created a world of lucrative new profit opportunities - governed by a new set of profit rules.

    Let me explain...

    To discover the next generation of global-stock-market winners, read on...

    Read More...
  • What's In Store for U.S. Stocks in Light of Greece's Tragedy? The recent month of February was quite interesting for U.S. stocks, because while the Dow Jones Industrial Average rose 2.6%, it didn't exactly take a direct route to those gains: There were eight separate triple-digit moves in the Dow, both up and down.

    At the root of that volatility were political and economic developments that challenged the rationale for the huge rally out of the March 2009 low. Bulls were basically rethinking their beliefs that the home-price plunge had abated, employment was on the verge of a big turnaround, governments could cut taxes and boost spending without end, and that interest rates would remain at zero for years.

    I had prepared subscribers for much of this turmoil. Back in early November, I highlighted signs of trouble in the market for government debt well before the troubles in Dubai and Greece came to a head. In December, we started a dialogue on what to expect as the U.S. Federal Reserve withdrew liquidity from the economy and lifted interest rates. The upshot was a series of letters detailing why you should expect the first nine months of the year to trade flattish with a lot of volatility.

    Read More...
  • Will Stocks Rebound From Last Week's Beating? Stocks slipped sharply in the past three days as the underlying market weakness we've been highlighting for the past two weeks finally mattered. A number of better-than-expected earnings reports were ignored. Even the successful election of a Republican to one of Massachusetts' two Senate seats, which helped health-care stocks push the market up on Tuesday, wasn't enough.

    Look at it this way: The sellers won a round, after being absolutely bludgeoned since last March.

    One of the key catalysts has been word that Chinese authorities are ordering some banks to curb lending -- another sign that China is tightening monetary policy in an effort to forestall a runaway credit bubble. Or maybe it was the Chinese government's decision to pull James Cameron's fanciful and rebellious "Avatar" movie out of its theatres. It's easy to get caught up in the Chinese growth story and forget how oppressive the communist regime running the show there is; these people crushed students to death with tanks.

    Read More...
  • Markman on the Markets: Historic Bull Run in Bonds Points to Higher Prices for U.S. Stocks A sluggish month in the stock market has equity investors worrying about what's next.

    But those equity investors would feel so much better if they'd just spend a little time studying the credit markets. And with good reason: The bull market in credit that continues to rage in the face of this stock-market lethargy leads us to one simple conclusion.

    Stock prices have to head higher.

    Indeed, independent analyst Brian Reynolds tells us that if stocks were trading at the same level as credit, the Standard & Poor's 500 Index would already be at 1,350 - 22% above where it closed on Friday.

    For those who argue that the market has already rallied a great deal, or too much, let me just note that the S&P 500 would have to rise by another 41% just to get back to the level of three years ago. The key thing that bulls have in their back pocket is that investors are still trying to get used to the idea that the sky hasn't fallen - and have not yet priced in the prospects for a 25% increase in S&P 500 profits that we are likely to see in 2010.

    Read More...
  • Dubai Debt Fiasco Could Weigh on U.S. Banks A potential default by Dubai on debt payments could have a ripple effect on U.S. banks and the still-gloomy commercial real estate industry, some analysts say.

    Citigroup Inc. (NYSE: C) has $1.9 billion invested in the nation's state-owned investment vehicle Dubai World, JPMorgan Chase & Co. (NYSE: JPM) said in a research note.

    While not directly affecting Citi or other major U.S. banks, the indirect effects could be more crippling on a broader scale, Rochdale Securities analyst Dick Bove told CNNMoney.

    "There could be huge indirect exposure," Bove said. "One has to assume that U.S. banks will be hurt."

    Read More...