The Stereo Type of the Unemployed

If you never been unemployed, then you don’t know what it is like to be unemployed. I hear all kinds of stories about how the unemployed people are making a killing by going on vacation, not working, and hanging out, and just enjoying life while everyone else has to go to work. The unemployed get free money according to the ignorant. When you question some of these people who tell you these stories, you find out that they got their information second and third hand about people who they don’t know. Sometimes they are talking about a real person but that person is telling others stories about their good unemployment fortunes to save face.

I became friends with this woman who was going to Alabama to see her relatives and wanted me to look after her tomato plants while she was away. I asked her what line of work she was in. She told me that she works for the US Army. That sounded reasonable because a US Army sticker was on her very expensive truck. But she seam to always be home. About a month later, she told me that she was moving to Atlanta because she was tired of waiting for the US Government to give her a job. Then she told me that she is unemployed. It was only one day after she moved; the constable came and placed a notice on her door to appear in court for failure to pay her rent.

The long term unemployed has other problems even if they go back to work. If they have a good skill and can find a job within a year, they will probably take a pay cut. However, they may come back to their pre-unemployment income level before they retire. That is if they are young enough and in the right field of work.

If you are over 40 years of age, have little skills that are in demand, have a criminal record, have bad credit, and have been unemployed for over one year, chances are, you may never see the type of money that you made before unemployment started for you.

To add pain to injury for the people getting ready to retire, your social security check is calculated on your ending years of working. You don’t work so your Social Security check is drastically reduced from the time you start receiving until you die.

Read the following article called “Unemployed risk a permanent pay cut.”

http://money.cnn.com/2011/10/06/news/economy/unemployed_income/index.htm?iid=Lead

“Unemployed risk a permanent pay cut” written By Chris Isidore @CNNMoney October 6, 2011

Do You Really Know How to Buy a Car?

Most people concentrate on the sticker price of the car without giving much thought to the financing and “add on” features of the deal. The over all cost of your deal is what you should be looking at. This is a common blind spot that consumers have when buying cars and dealer know it.

In 1972, I bought my first new car at age 21. Being a computer programmer and over seeing the “Floor Plans” System for Union National Bank in Pittsburgh, I had a very good idea how much money the dealers where paying banks to keep the cars on the dealer’s lots. Going from dealership to dealership, I knew what inventories these dealers had. So taking advantage of me was not going to be easy. But like everyone else especially since I was young, they tried.

I found the car that I wanted from Dealer “A” but I went to Dealer “B” to buy the car. I told them how much I wanted to buy the car for. We agreed on a price that was lower than the sticker price. But the dealer thought that he was going to make up the difference on the interest rate of the loan and the “add on” options of the car. He started telling me how much the different options would cost me and I started telling him that the options he is talking about is already on the car. He quoted me an interest rate that his dealership would give me and I told him that I already have arrangements to buy my car using my bank.

Getting a loan was not like it is now. Up until 2008, a person could drop out of the shoot at the hospital and qualify for a loan. In my day, it did not matter if you had a good job or no job, at age 21 you needed a co-signer. My father co-signed for me. They offered me life insurance with the loan. In the event that something happened to the borrower, the loan would be paid off. But since the loan was in my father’s and my name, I took out the policy on my father.

Why? He was 55 at the time, smoked two or more packs a day and got about 3 hours of continuous sleep a day for 25 years. He worked 6 days a week from January to October. He worked 7 days a week from November to December for 25 years. Knowing the odds in 1972, he was at the end of his life span. He died less than 4 years later and the bank paid the car off and placed the car in my name. Some people called me all kinds of names because I was smart enough to know that Life Insurance is a gamble. You are betting that you will die and the company is betting that you will not. In most cases, I will not advise people to take out this option when buying a car because in most cases the odds are against you.

Below is a link to the article, “Biggest blind spot for car buyers? Financing” published by Zion’s Direct Online on September 29, 2011 written by Candice Choi.

http://think.zionsdirect.com/2011/09/29/biggest-blind-spot-for-car-buyers-financing/?m_source=ym_email&utm_medium=email&utm_content=article_3&utm_campaign=2011_10_05_newsletter

Should I Refinance My Mortgage?

Over the past 30 years, the banking industry trained the public to treat their house as a revolving loan account. But as the housing bubble hit, that revolving loan account got smaller and smaller until one day, people got out of bed and discovered that they had high mortgage debt and faced a pay cut or lay off. That is when the real fun began.

A family came to me and asked if they should refinance their home after being in the home for about 2 years. The ad says that they can qualify for a loan with a rate 2% lower than what they have now. They also had the impression from other people that once you buy a house, the equity in your house increases every year. That may have been true from 1950 to 2005 but not today. I told them that they can talk to the bank about it. They had nothing to loose by inquiring. They reported back to me later telling me that the bank said they would not advise them to refinance since they had no equity in the house and the fees to do the refinancing would not be worth the refinancing.

Don’t be fooled by what you read in the newspapers or see on TV. Mortgage rates are the lowest that they have been since my parents bought a home in 1952. But for some homeowners, the opportunity to refinance could be placed out of reach by an appraisal. The process isn't an exact science and homeowners may be surprised to find their property isn't worth as much as they have been led to believe.

Read the article below “Refinancing your mortgage? Understand appraisals” published September 30, 2011 by Zion’s Direct Online Brokerage and written by Candice Choi.


http://think.zionsdirect.com/2011/09/30/refinancing-your-mortgage-understand-appraisals/?m_source=ym_email&utm_medium=email&utm_content=article_1&utm_campaign=2011_10_05_newsletter

How do these Financial PHD Geniuses keep their Jobs?

CNN Money came out with an article around Oct. 3, 2011 saying;

“Investors became so nervous in the past two months that they're not willing to gamble on risky junk bonds anymore -- despite the lucrative promise of high yields.”

“The junk, or high-yield bond market has tumbled along with the stock market, which suffered its worst performance in three years.. Traders say it's eerily reminiscent of the months leading up to Lehman Brothers' bankruptcy in 2008.”

A Bond Investor is not a Bond Trader. The way you invest in bonds for the short-term or the long-term depends on your investment goals and time frames, the amount of risk you are willing to take and your tax status. Individual bonds mature.

A Bond Trader is a person who buys and sells bonds for short term gain. They base their trades on technical analysis and charts. These people are not investors but speculators.

Here is the reason why I have been telling you investors to buy junk bonds below par or $1,000 because they usually mature at $1,000.

The article goes on to say, “Before August, the high-yield market was soaring, and investors were on pace to generate annualized returns of roughly 11%. But shortly after the stock market started gyrating wildly in August, investors sold off even the safest of the junk bonds, which are those rated BB. These BB bonds are down roughly 5%, and the CCC bonds are down 13% for the year.”

The article is correct but if you lock in your yield at 11%, you will get 11%. If you have your money in a mutual fund, you can’t lock in your yield. That is why I tell you to buy individual junk bonds if you want to lock in your yield. A mutual fund is a speculative investment. Personally in this market and this economy, I would only invest in S&P Rated B- to BBB bonds. Your only fear is corporate bankruptcy of the underlying company. My portfolio as of Oct. 26, 2011 is back to my July 1, 2011 levels.

If I had the time and money, I would buy;

Lender Processing Services Inc. 8.125% of 07/01/2016

Recent Price $952.30;
Yielding 9.39% with an S&P Rating of BB+.

Lender Processing Services, Inc. (LPS) is a provider of integrated technology and services to the mortgage lending industry, with mortgage processing and default management services in the United States. The Company operates in two segments: technology, data and analytics and loan transaction services, which produced approximately 31% and 69%, respectively, of its revenues during the year ended December 31, 2010. The Company's technology solutions include its mortgage processing system, which automates all areas of loan servicing, from loan setup and ongoing processing to customer service, accounting and reporting. Its technology solutions also include its desktop system, which is a middleware enterprise workflow management application designed to streamline and automate business processes. Its loan transaction services include its default management services, which are used by mortgage lenders, servicers and other real estate professionals.

Investing for Less than Three Year Period

When I was in my 20s, I tried telling my mother how to invest her money. She did not want to hear it. After all, she knew everything and I knew nothing. It was the 1970s, a time of high inflation. Money market funds were giving 7 to 9 percent interest. Bank accounts were giving 5 percent. Inflation was running round 8 percent. She kept her money in a savings account. She never changed and she lost at least 3 percent due to inflation per year.

Today, we are in danger of deflation. Saving accounts are giving less than one percent. Money Market accounts are giving a little over one half percent. Inflation is at about 3.8 percent. Needless to say, you change with the times.

That is why we are going to talk about investing in corporate bonds that mature in about two to three years. The information that I am talking about here was taken on Sept. 30, 2011.

International Lease Financial M 5.625% of 09/20/2013 selling for $965
Bond is rated BBB- by S&P CUSIP is 45974VA81

The International Lease Finance Corporation (ILFC) is an aircraft lessor headquartered in Century City, Los Angeles, California.

It is the world's largest aircraft lessor by value, though ILFC's rival, General Electric's GECAS unit, has more aircraft. It leases Boeing and Airbus aircraft to major airlines worldwide, including AeroMexico, Air Canada, Asiana Airlines, Korean Air, Cathay Pacific, Cyprus Airways, Air France-KLM, Lufthansa, Alaska Airlines, American Airlines, Air India, Continental Airlines, Norwegian Air Shuttle, Mexicana, Pakistan International Airlines, Emirates Airline, Gulf Air and most recently, Delta Air Lines.

Royal Bank of Scotland Group P 5% of 11/12/2013 selling for $964.10
Bond is rated BBB by S&P CUSIP 780097AN1

The Royal Bank of Scotland Group (LSE: RBS) is a British banking and insurance holding company in which the UK Government (HM Treasury) holds an 84% controlling share (economic interest; actual voting rights will not rise above 75% in order for it to retain its listing on the London Stock Exchange). This stake is held and managed through UK Financial Investments Limited. The group is based in Edinburgh, Scotland, and is the world's largest company by assets. The group controls the Royal Bank of Scotland plc, founded in 1727 by a Royal Charter of King George I, the National Westminster Bank, which can trace its lineage back to 1650, and Ulster Bank in Ireland.

APRIA Healthcare Group Inc. 11.25% of 11/01/2014 selling for $975

Bond is rated BB+ by S&P CUSIP 037933AE8

Apria Healthcare Group Inc., together with its subsidiaries, provides home healthcare products and services in the United States. It offers home respiratory therapy, home infusion therapy, and home medical equipment services. The company’s home respiratory therapy products and services include oxygen systems, ventilators, respiratory assist devices, continuous positive airway pressure and bi-level devices, infant apnea monitors, nebulizers, and sleep apnea devices, which are used to treat chronic obstructive pulmonary diseases, respiratory conditions associated with nervous system disorders or injuries, congestive heart failures, and lung cancers.

I own bonds in International Lease Financial and Apria Healthcare Group Inc.

Invest to your advantage

I hear a lot of talk when I go to parties or some other social gathering. I can always count on someone coming up to me and asking about what hot stock I can suggest to them so that they can make a killing in the stock market. They want to buy the stock on Monday and by Wednesday they want to sell and buy some Bentley. Every single time I tell them that if I had that kind of information I would not be working for a living and would keep it to myself.

Most people have no clue when it comes to investing money. No, what I tell you, they do not teach in high school or colleges. I had to learn it from old retired steel workers in Pittsburgh, Pa. That is why money managers for the past 25 years have been robbing the average worker without their knowledge. They have been raiding their pension funds, bank funds, 401Ks, IRAs and the average worker has been saying thank you. Then they say, I will come back for the same treatment.

The same people are involved in every part of the business. Companies who have been giving their employees retirement accounts have been setting them up with the same investment firms. The traders in the market (who cause securities to rise and fall) work for the same investment firms. So the average person has lost a large part of there retirement funds over there working life time. The worker realizes it when it comes time to retire and live off the money. By that time it is too late for them.

Jim Cramer, the host of the Mad Money TV Show said something recently that I agreed with. I have been preaching this to you and anyone else that will listen for years. That is investing to your advantage, not the broker, the banker, your employer, or your friend’s advantage. Why buy stocks that give no dividends? By investing in income stocks you can reinvest the dividends and buy more of the same stock. Chances are, over the years, the value of your portfolio will go up even if the stock does not. Stocks and mutual funds are speculative because they do not mature. But with yields this high, I would take the risk.

This is also true for mutual funds that give high dividends. I have talked about Dreyfus High Yield Strategies Fund in my Blog before. I think it has come down to a price that I would start buying. As of Oct. 5, 2011, the price was $4.12 per share. It gives 54 cents per year in dividends. That is a yield of 12.62%. Using the rule of 72, dividing 12.62 into 72 and you have a little over 5.7 years for your investment to double. Using the rule of 115, dividing 12.62 into 115 and you have a little over 9 .11 years for the investment to triple.

Take this information and open a Share Builders Account or an account with the company that you are investing in and now you have a vehicle that charges you little if any commissions. An IRA allows you to defer taxes to the years where you are not working or working at a lower pay.

What can a person do with a self directed retirement account if they start at age 30 and stop at age 64? I think they can live a little better than their friends who thought that their investment firm is holding their hand and looking after their money for 34 years. This is called investing to your advantage.

Protecting You and Your Computer

I am sure you all know by now to use antivirus software such as “Mc Afee” to keep people from causing harm to your computer. This harm may come in the form of hijacking your computer by using a “Trojan Horse” Program. That program allows someone at another computer to see what you are typing like your bank passwords and ID. While you are down loading free music, you may also down load “Trojan Horse”, Spy Ware, Ad ware, and other programs that misdirect your links to other websites. Some viruses even go into your computer and change the setting so that your PC programs become unusable. All this may cost you hundreds of dollars to fix unless you are a certified Personal Computer software expert. So in this blog, we are not going to talk about such simple to avoid problems.

Instead we are going to talk about how you may help computer criminals defeat your antivirus software that will cause harm to you and your computer. I want to rob your bank account knowing that you get paid every other Wednesday. I know that because I sent you an email telling you that you are in the top ten finalists to win $100,000 if only you fill out a questionnaire with your name, address, phone number. Over the past 6 months I had you fill out other questionnaires. I send you a link with these questions on it. What you don’t know is that this link contains a Trojan Horse. Now I can get your bank account information, your personal information, and other important information about you. I can be you to any financial institution. From this, I can have your bank transfer your paycheck to my Nigerian Bank. By the time you find out about it, the money is gone. Your checks are bouncing all over the country.

Never open links, reply to contests, or other mail that you are not expecting from one of your stores or businesses that you deal with. Never give out personal information unless you know the people that you are giving it to and what it will be used for. Don’t allow your friends and family to give out information on you to people holding contest as well. Emails are used to hide downloads of “Trojan Horse”, Spy Ware, Ad ware programs into your computer and Blackberry (cell phones).

Never open mail that has no subject in the subject line unless you are expecting such an email. Nine out of ten times, it is not from who you think it is. It is from someone who hijacked your friends email ID and is sending you a virus.

Your 22 year old nephew is here from Nevada and wants to use your computer tonight while you go to bed. You see no problem with this since he is your sister’s child and you helped raise him since he was born. But you never know what is hidden in someone’s life. Your nephew goes on sex sights and without his knowledge “Trojan Horse”, Spy Ware, Ad ware programs are loaded into your computer. Without your knowledge or consent he contacts some 14 year old “Bomb Shell” on one of the social sites and starts talking about the things he wants to do to her. What he does not know is that he is talking to a “Child Predator” Police Officer. The Officer makes a date with your nephew the next day. He walks right into a police trap. You may say that it is not your problem. Yes it is, he used your computer and the police will come to your house and pick it up for evidence. They may go through your computer looking for evidence. The investigation may extend to your involvement into your nephew’s activities. The police don’t care who is charged and convicted for a crime. They are involved to gather evidence for the district attorney. Even if you are not charged as part of the crime, you will not have access to your computer. It may take six months or more before you see your computer again.

Here is the reason why I never let anyone use my computer, Blackberry (Cell Phone).