Finance Most Popular Stories

Nortel accepts Nokia Siemens bid on assets -- WSJ

Fri, 19 Jun 2009 23:23:00 +0000

Telecommunications equipment company Nortel Networks Corp. reportedly has accepted a $650 million bid for the most lucrative part of its carrier networks division from Nokia Siemens Networks.

[via http://www.marketwatch.com/ @ June 19, 2009 @ 11:23pm]

The Flipside Of Failure

Fri, 12 Jun 2009 00:00:00 +0000

Every financial loss is someone's opportunity. [via http://www.forbes.com/ @ June 12, 2009 @ 12:00am]

10 ways to beat the rising cost of health care

Wed, 01 Jul 2009 04:00:00 +0000

Talk about a recession double whammy. It's bad enough that you've been working harder with less prospect of getting a raise. Now it feels as if you can't even afford to get sick. [via http://money.cnn.com/ @ July 1, 2009 @ 4:00am]

The Personal Finance Hour, Episode 14: Home Improvement

Mon, 29 Jun 2009 20:00:31 +0000

Summer’s here, and for many homeowners that means it’s time for projects around the house. Since we bought our current home, Kris and I have spent a lot of money to make improvements. (At this very moment, contractors are painting the house!) Join Jim and me this afternoon for the 14th episode of The Personal [...] [via http://getrichslowly.org/blog/ @ June 29, 2009 @ 8:00pm]

Quantum Computing Gets Big

Mon, 29 Jun 2009 00:00:00 +0000

Yale researchers build a quantum processor that fits in a bread box--sort of. [via http://www.forbes.com/ @ June 29, 2009 @ 12:00am]

Are the new home appraisal rules good for consumers?

Tue, 30 Jun 2009 21:34:33 +0000

By Xin Lu

On May 1st a new set of home appraisal rules called the Home Valuation Code of Conduct was put into effect by Fannie Mae and Freddie Mac in order to distance realtors and mortgage brokers from appraisers. This was put in place because during the housing bubble appraisal fraud was rampant and some appraisers felt pressured by realtors and brokers to hit the desired numbers. How is this affecting consumers?

The biggest change in the Code is that loan officers, mortgage brokers, or real estate agents can no longer have any role in choosing appraisers. The lender is responsible for choosing the appraiser and following the Code if they want to sell the mortgage to Fannie Mae or Freddie Mac. The lender could also accept an appraisal prepared for another lender if the other lender also followed the Code.

As a result of the new rule some lenders are outsourcing the selection of appraisers to appraisal management companies, and some say that this is increasing appraisal fees for consumers because these companies take a cut of an appraiser's fee. The appraiser has to increase his or her price accordingly to recoup the loss. Another critism is that these appraisal-management companies do not always choose local appraisers that know an area well. As a result some appraisals may be inaccurate.

Right now the National Association of Realtors does not like this rule very much and their chief economist Lawrence Yun said the following:"In the past month, stories of appraisal problems have been snowballing from across the country with many contracts falling through at the last moment."

Bill Garber, the Director of Government and External Relations at the Appraisal Institute issued the following response to the NAR's complaints, "In a typical real estate transaction [such as a buyer seeking a loan], our clients are the lenders. Appraisers provide lenders with information that protects them from making questionable loans and investments and helps them minimize risk. However, that should not suggest a bias toward lower valuation. Appraisers reflect the market, and sometimes, the markets don.t act like we want them to or hope they will. Nonetheless, competent and professional appraisers understand this and develop credible estimates of value that ultimately ensure that lenders loan the proper amount, buyers don't pay too much and sellers get a fair price."

I think Bill Garber's response is right on the spot and lower appraisals are simply reflecting the market now. It is beneficial for consumers to get lower prices on homes, but I have also heard anecdotal stories of faulty appraisals where information such school districts and home size were wrong. It is very frustrating for home buyers and sellers when a low appraisal stops the loan process. If I were a home buyer in that situation I would probably check the appraisal report for errors first, because any factual errors can be reported to the lender. If the report seems to contain no errors then I would attempt to negotiate the price to be at the appraisal because I would not want to pay too much. I do not think that a low appraisal is the death of every single real estate transaction as long as everyone involved are willing to compromise.

In conclusion, I think it is a good thing if an honest and accurate appraisal shows you that you are willing paying too much for something. I think the new code does have some problems because it adds a layer of bureaucracy and pricing through appraisal management companies. However, this new process does remove a lot of bias in appraisals because it is a lot less likely that the appraiser chosen has a previous relationship with the real estate agent or mortgage broker involved in the deal. I am hoping that this reduces appraisal fraud by a great margin, and I think that is good for everyone involved in a real estate transaction.

What do you think of this new code? Have you faced difficulties in your real estate transactions lately due to appraisal issues?

Permalink | Comments | Xin Lu's blog | Channel: Personal Finance, Consumer Affairs, Real Estate and Housing

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This article is from Wise Bread.

[via http://www.wisebread.com/ @ June 30, 2009 @ 9:34pm]

Consumer credit: Surprise $1.8 billion jump

Fri, 06 Mar 2009 21:44:14 +0000

Consumer borrowing showed a surprise rise in January, snapping a three-month decline and signaling that households may have started to loosen their purse strings. [via http://money.cnn.com/ @ March 6, 2009 @ 9:44pm]

'Goodbye and good riddance' AIG directors!

Tue, 30 Jun 2009 18:34:39 +0000

AIG shareholders, a.k.a. U.S. taxpayers, on Tuesday ousted the majority of the leadership who oversaw one of the biggest corporate unravelings in American history. [via http://money.cnn.com/ @ June 30, 2009 @ 6:34pm]

Escape from Cubicle Nation

Mon, 29 Jun 2009 12:00:01 +0000

Last Friday, I attended a workshop put on by Pamela Slim, who writes about entrepreneurship at Escape from Cubicle Nation. Before this meeting, I didn’t know much about Slim or her message, but her work came highly recommended from my friend, Chris Guillebeau. “Pam is the real deal,” he told me. “Her book is what [...] [via http://getrichslowly.org/blog/ @ June 29, 2009 @ 12:00pm]

Oilfield Activity May Be Rebounding

Tue, 30 Jun 2009 00:00:00 +0000

Rig count rises slightly on upturn in oil prices, but natural gas drilling continues to fall. [via http://www.forbes.com/ @ June 30, 2009 @ 12:00am]

A $15,000 tax credit for all homebuyers

Wed, 17 Jun 2009 10:44:41 +0000

[via http://money.cnn.com/ @ June 17, 2009 @ 10:44am]

US, EU Act Against China on Raw Material Exports

Tue, 23 Jun 2009 00:00:00 +0000

[via http://www.cnbc.com/ @ June 23, 2009 @ 12:00am]

Betting on a Bounce: How to Play the Housing Sector (On the Street)

Fri, 12 Jun 2009 04:00:00 +0000

It’s been over a year since the housing sector imploded. Yet, it's still at the epicenter of the current economic crisis. Many market watchers are pinning any chance of a broad recovery on housing pulling one off first, so the data emerging out of the sector is closely watched. Indeed, while most investors have steered clear of the industry, other opportunistic ones are reading into the numbers and predicting housing will make a remarkable rebound over the next few years. They are even betting billions of dollars by investing in housing-related mutual funds, exchange-traded funds and individual stocks. The big question: If they are right should you jump in, too?

The problem with answering that is the data are sometimes contradictory. In fact, these days it seems to always be contradictory. Over the last month, investors have poured over numbers on pending home sales, building permits, regional trouble spots, home builder earnings, mortgage rates and foreclosures. For every piece of news that seems to point to a bottom occurring there is another that shows there's still room to fall further. One detail that can’t be denied: Since the 2006 peak of national property values, average home prices are down nearly a third, back to levels last seen in the fourth quarter of 2002.

All that means making a smart investment in the housing sector is a risky prospect. Just like when “no one had a good forecast about when the bubble would burst,” says Jim Diffley, managing director at the consulting firm IHS Global Insight, “there's a challenge to betting that prices have bottomed or are about to bottom and will come up.”

For investors trying to figure out what to do amidst the crisis the most important thing to remember is that national numbers encompass thousands of smaller stories. There are parts of the country hurting more than others — the ailing Southeast vs. the somewhat stable New England area — and parts of the housing market have succumbed more than others — luxury houses vs. starter homes. For example, recently the National Association of Realtors said pending home sales in New England, New York, New Jersey and Pennsylvania were up 36% in April from the previous month’s level. The southern region lost .2% during that same time period. Various other reports say Phoenix, one of the hardest-hit housing markets, has seen the average home price slip 53% from the peak two years ago. Dallas, however, is only down 11%.

“It's something of a cliché, but all real estate markets are local,” says Jack McCabe, an independent housing analyst and president of McCabe Research & Consulting in Deerfield Beach, Fla., a state with the third-highest rate of foreclosures nationwide. "Every market started this boom and bust cycle at different times." Adds Dave McCarthy, chief executive of Integrated Asset Services, a Denver-based company that runs a proprietary housing index on 360 counties: In some local markets “we're starting to see some leveling off. It's at least looking less volatile than the last couple of months.”

A savvy stock picker could read into those statements and think home builders with exposure to certain areas may have seen the worst of times while others could be in store for worse. That’s a pretty big jump to make, though, says McCabe. He thinks it's early, risky and maybe even foolish to buy home-builder stocks like Toll Brothers (TOL), D.R. Horton (DHI) or Pulte (PHM) just because they appear cheap. “I don't see it,” he says. “You've got escalating foreclosures, escalating unemployment and excess inventory – that should give you an idea of the health of these markets. Home builders just can't compete with existing units on the market.”

Instead of trying to predict which individual home builder will recover first, a less-risky option may be to buy an exchange-traded fund that owns a basket of housing-related stocks. SPDR S&P Homebuilders (XHB) is an ETF that counts Home Depot (HD), Lowe's (LOW), Bed Bath & Beyond (BBBY), Sherwin Williams (SHW) and D.R. Horton among its top holdings. The iShares Dow Jones U.S. Home Construction fund (ITB) tracks an index that includes Toll Brothers, KB Home (KBH) and Meritage Home (MTH). Both are widely traded and cheap. But they can also swing wildly on a daily basis, especially when data are released. (Fidelity offers a mutual fund, Select Construction & Housing (FSHOX), that owns many of the same companies.)

Not every investment has to hinge on a rosy recovery for housing. For investors who can stomach a little more risk, McCabe suggests a bet on more bad news, this time in commercial real estate. General Growth Properties, the second-largest U.S. mall owner, went bankrupt in April, because it couldn't refinance its debts, despite having almost $30 billion in assets. “I'd probably short some of the retail and office public companies,” he says, because many of them are facing large balloon payments or refinancings that will be far more costly than the cheap credit terms they got five years ago.

Real estate investment trusts like Simon Property Group (SPG), Federal Realty Trust (FRT) or Vornado Realty Trust (VNO) have all seen strong rebounds from March, but the combined dropoff in consumer spending and the looming commercial mortgage crunch could bode poorly. “I see that as the next shoe to drop,” McCabe says. “We have over $900 billion in loans on commercial projects that have balloon payments and need new financing, and I don't see the money being there.”

Another atypical option: Buy distressed properties. IAS, which specializes in default valuations, says 42% of the property sales it tracked in April were bought by investors. However, these weren’t big bulk buys of unsold condos in battered markets like Las Vegas, Southern California, or Florida, where vulture investors have been preying. "It's all onesies-twosies," says McCarthy. “Savvy local investors are starting to get back into the market.”

The idea of making tantalizing returns on a well-timed housing play is an intriguing prospect. But most investors should remember this: The average S&P 500 index fund owns many of the same companies in the offerings listed above, so if they rally your plain-vanilla fund will, too.

SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved.

[via http://www.smartmoney.com/ @ June 12, 2009 @ 4:00am]

As Oil Rises, Energy ETFs Rally (Daily ETF Wrap-Up)

Fri, 12 Jun 2009 04:00:00 +0000

Market Wrap-Up

Stocks ended Friday nearly flat for the week, as a computer glitch halted trading on about 200 names in a sideways session. Commodity prices retreated, knocking back key stocks, as consumer sentiment came in weak. The Dow Jones Industrial Average rose 28 points to close at 8799. For a complete rundown of Friday’s trading session see our market story.

Winners

As crude closed above $72 a barrel this week, the United States Oil fund (USO) rallied 5.6%. Despite a Friday knock, the SPDR S&P Metals & Mining fund (XME) rose 5.2% for the week as commodity prices picked up world-wide.

Losers

Worries that semiconductor prices were outpacing demand knocked the chip-heavy iShares MSCI Taiwan fund (EWT) back 2.4% for the week. Despite a strong Friday rally, the Vanguard REIT fund (VNQ) finished the week down 2.0% on concerns about rising interest rates affecting commercial mortgage financing.

This Week’s Industry News

Earnings Note
Bidding for Barclays (BCS) appeared to end Friday with New York-based asset manager BlackRock (BLK) usurping private-equity fund CVC Capital Partners with a $13.5 billion offer for the Barclays Global Investors business. Barclay's previously signed a $4.4 billion deal for its iShares ETF business with CVC.

Launching Pad
WisdomTree announced plans for a trio of actively managed ETFs pending approval of the Securities and Exchange Commission. The WisdomTree Real Return fund, the WisdomTree Managed Futures fund and the WisdomTree Long-Short fund are designed to use hedge-fund-like investment strategies pinned to underlying instruments. The filing did not contain fee information.

Next Week’s Notebook

Earnings and Conference Calls

Monday
Capstone Turbine Corporation, Casella Waste Systems, La-Z-Boy, Motorcar Parts of America, National Technical Systems, Synergetics USA

Tuesday
Adobe Systems, Best Buy Co., FactSet Research Systems, Smithfield Foods

Wednesday
FedEx, IHS

Thursday
Carnival, J. M. Smucker, Pier 1 Imports, Research In Motion, Wimm-Bill-Dann Foods, Winnebago

Friday
CarMax

Economic Data

Monday
8:30 a.m. June Empire State Fed Manufacturing Survey
9:00 a.m. April Treasury International Capital
1:00 p.m. April NAHB Housing Index

Tuesday
7:45 a.m. ICSC Chain Store Sales
8:30 a.m. May Housing Starts
8:55 a.m. Redbook Retail Sales
8:30 a.m. May Producer Price Index
8:30 a.m. May Producer Price Index, ex-food and energy
9:15 a.m. May Industrial Production
9:15 a.m. May Capacity Utilization
5:00 p.m. ABC/Washington Post Consumer Confidence

Wednesday
8:30 a.m. May Consumer Price Index
8:30 p.m. May Consumer Price Index, ex-food and energy
8:30 a.m. 1Q Current Account

Thursday
8:30 a.m. Initial Jobless Claims
10:00 a.m. June Philadelphia Fed Business Index
10:00 a.m. May Conference Board Leading Indicators
10:00 a.m. DJ-BTMU Business Barometer

Friday, June 19, 2009
No economic events scheduled

A look at how the industry's most popular ETFs did on Friday:

10 Largest ETFs
Symbol	Net Assets	Price	52 Week High	52 Week Low	Volume
SPY	60,678	95.08	136.44	68.13	182,980,899
EFA	27,281	48.43	73.11	32.16	21,097,925
EEM	25,768	33.74	47.68	19.12	55,787,693
GLD	31,354	92.17	97.24	70.14	13,805,887
IVV	16,380	95.39	136.65	68.24	2,517,888
QQQQ	13,388	36.65	48.85	25.51	109,368,022
IWF	9,153	41.94	58.47	30.49	3,443,897
SHY	7,391	83.27	85	82.11	607,770
VTI	9,440	47.79	68.52	33.75	1,410,829
IWD	6,740	49.18	73.73	34.22	2,088,179

[via http://www.smartmoney.com/ @ June 12, 2009 @ 4:00am]

It's your patriotic duty to save!

Tue, 30 Jun 2009 16:45:52 +0000

Many owners of our country's bonds are worried that the federal government is spending like inebriated sailors on shore leave to try and get the nation out of this economic mess. [via http://money.cnn.com/ @ June 30, 2009 @ 4:45pm]

The Next To Fall

Mon, 01 Jun 2009 00:00:00 +0000

After GM, will the Obama administration step in when other unionized companies go bankrupt? [via http://www.forbes.com/ @ June 1, 2009 @ 12:00am]

Pfizer offers to boost stake in Indian business

Mon, 13 Apr 2009 07:29:00 +0000

Pfizer is offering $136 million to boost its stake in its India business unit, Pfizer Ltd., to 75% from it current 41%.

[via http://www.marketwatch.com/ @ April 13, 2009 @ 7:29am]

The GRS Garden Project: May 2009 Update

Sat, 30 May 2009 14:30:55 +0000

Every month, my wife and I track how much time and money we spend growing food. This is the report for May 2009. (Here are the results for 2008.) What a difference a year makes! Our fruits, berries, and vegetables had a slow start last year (and then were further slowed by a cold, cold June). [...] [via http://getrichslowly.org/blog/ @ May 30, 2009 @ 2:30pm]

Billionaire Rivals

Thu, 11 Jun 2009 00:00:00 +0000

The stakes are high, and fights nasty, when the world's wealthiest battle each other. [via http://www.forbes.com/ @ June 11, 2009 @ 12:00am]

Treasury to Name Up to 9 Fund Managers for PPIP

Wed, 01 Jul 2009 00:00:00 +0000

[via http://www.cnbc.com/ @ July 1, 2009 @ 12:00am]

Why Printer Ink Is So Expensive (Tough Customer)

Fri, 26 Jun 2009 04:00:00 +0000

Leo Tolstoy, wordy fellow that he was, used a lot of ink. He was also on the frugal side, eventually renouncing his fabulous inheritance, trying to free his serfs and opting to stay in his kid sister’s convent. So you’ve got to wonder, if the Russian novelist had a home office, what kind of ink-jet printer would he use? It’s a question worthy of a great thinker’s consideration. After all, depending on which system you choose, the cost of printing a black-and-white page can range from two to 14 cents. Whether you’re printing a 1,400-page novel or your favorite borscht recipes, it adds up fast.

Maybe he’d go for the Kodak. Unlike its rivals, which sell printers at a loss and make huge profits on the ink, the photo giant has been marketing its ESP printer line with an appealingly contrarian pitch: a fairly priced printer that takes cheap ink. Yes, it costs 30 percent more than comparable models, but the cartridges cost less than $15, and per-page printing costs are among the lowest in the industry. When I recently tried printing War and Peace using the Kodak ESP 5 and its $10 black cartridge, I got all the way up to page 317, where Rostov hears that the czar has been hit with a cannonball. Three cents a page works for me.

You’d think the line would be a surefire hit. After all, the cost of printer ink is an old sore spot with consumers. In a 2007 Ipsos survey, 69 percent of respondents said cheaper ink tops their home-printer wish list. And it’s a legitimate gripe. The average retail price of a milliliter of ink shot up 360 percent between 1999 and 2007. Meanwhile, a $30 ink cartridge costs just three bucks to make; suppliers could cut prices in half and still take in a nice profit, says Lyra Research senior analyst Andy Lippman.

But for most manufacturers, the traditional model is too lucrative to change. HP, for one, says its $29 billion Imaging and Printing segment is its most profitable division, earning three times what the company does on personal computers. That’s because even while printer makers lose about $30 on every $100 printer sale, the typical customer spends more than three times as much on ink over a three-year period as he did on the printer. And often, the cheapest models require the most expensive ink. If you find yourself irresistibly drawn to, say, the $30 Lexmark Z611 printer, replacement cartridges will set you back $66 a pop.

So is Kodak revolutionizing the industry? Hardly. While the line launched with huge press fanfare, it sold just 520,000 printers last year—a tiny fraction of the 85 million ink-jet printers sold overall. Analysts say it’s because consumers are too shortsighted to consider the cost of ink when buying a printer. But I suspect the real reason is a strange quirk in the law that makes it almost impossible to compare long-term ink costs. The 1966 Fair Packaging and Labeling Act, which requires manufacturers to state quantities on consumer packaging, allows just a few exceptions, including lighters, safety pins and—you guessed it—ink. Only one of the major makers, HP, offers page-yield information on its cartridge packaging, and you still have to calculate per-page costs. “Consumers don’t have the right information to make the right choice,” says American Consumer Institute President Steve Pociask, who studies the ink market.

Actually, the information is available, if you know where to look. Two years ago printer makers agreed on a universal standard to test how many pages their ink cartridges produce. HP and Epson, bless their inky souls, link to this information from their product pages. Canon and Lexmark, meanwhile, bury it so deeply online that I had to call their press offices for directions. Once you’ve got the data, you simply have to perform a series of seven calculations to determine the three-year cost of ownership for any particular printer. Have fun! Personally, while Tolstoy may not approve, I think I’ll let my serfs do the work.

[via http://www.smartmoney.com/ @ June 26, 2009 @ 4:00am]

There's No News Like Bad News

Tue, 30 Jun 2009 00:00:00 +0000

More reflections on the beleaguered middle-class. [via http://www.forbes.com/ @ June 30, 2009 @ 12:00am]

Auto supplier Lear, to file for bankruptcy

Wed, 01 Jul 2009 21:40:30 +0000

Read full story for latest details. [via http://money.cnn.com/ @ July 1, 2009 @ 9:40pm]

Good-Bye, Microsoft Money! 16 Powerful Personal Finance Programs

Wed, 01 Jul 2009 12:00:43 +0000

As of today, Microsoft Money is no longer available for purchase. Microsoft has essentially conceded that there’s no demand for the product. From the website: With banks, brokerage firms and Web sites now providing a range of options for managing personal finances, the consumer need for Microsoft Money Plus has changed. After suspending annual updates of [...] [via http://getrichslowly.org/blog/ @ July 1, 2009 @ 12:00pm]

No slowdown for Holiday Inn makeover

Thu, 02 Jul 2009 00:17:00 +0000

In the middle of one of the worst downturns in its industry’s modern history, Intercontinental Hotels and its franchisees are spending about $1 billion to breathe new life into a classic, though somewhat tired travel brand: Holiday Inn.

[via http://www.marketwatch.com/ @ July 2, 2009 @ 12:17am]

Finance Most Popular Stories

Nortel accepts Nokia Siemens bid on assets -- WSJ

The Flipside Of Failure

10 ways to beat the rising cost of health care

The Personal Finance Hour, Episode 14: Home Improvement

Quantum Computing Gets Big

Are the new home appraisal rules good for consumers?

Consumer credit: Surprise $1.8 billion jump

'Goodbye and good riddance' AIG directors!

Escape from Cubicle Nation

Oilfield Activity May Be Rebounding

A $15,000 tax credit for *all* homebuyers

US, EU Act Against China on Raw Material Exports

Betting on a Bounce: How to Play the Housing Sector (On the Street)

As Oil Rises, Energy ETFs Rally (Daily ETF Wrap-Up)

Market Wrap-Up

Winners

Losers

This Week’s Industry News

Next Week’s Notebook

It's your patriotic duty to save!

The Next To Fall

Pfizer offers to boost stake in Indian business

The GRS Garden Project: May 2009 Update

Billionaire Rivals

Treasury to Name Up to 9 Fund Managers for PPIP

Why Printer Ink Is So Expensive (Tough Customer)

There's No News Like Bad News

Auto supplier Lear, to file for bankruptcy

Good-Bye, Microsoft Money! 16 Powerful Personal Finance Programs

No slowdown for Holiday Inn makeover

A $15,000 tax credit for all homebuyers