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Nearly every man who develops an idea works it up to the point where it looks impossible, and then he gets discouraged. That's not the place to become discouraged.
Thomas Edison Categories
Monthly Archives: June 2009
Recovering From a Downturn—Retirement: 3 of 6
In part three, we discuss investment strategies during today’s economic downturn.
Imagine you’re in a large building with numerous elevators, says David Magee, president of Contango Capital Advisors, Inc. “One opens and you step in with the expectation that it will take you up. Though you may start in the desired direction, imagine that the elevator suddenly reverses course and takes you to the basement instead. For most people, this is exactly what has happened to them and their investments over the course of 2008. Read More
Summer View
The extended American recession, now into its 18th month, will be the longest and deepest of any since the Great Depression. A return to positive (if modest) U.S. economic growth during the July to September quarter is the consensus view of forecasting economists. Modest growth should be followed by more robust performance during 2009’s final quarter and more solid growth throughout 2010.
A return to U.S. economic growth clearly does not suggest that problems with housing, commercial real estate, sick investment portfolios, and wobbly financial markets are behind us. Read More
Rethinking: Banking Today
Back in the 1980s, a period, like today, of great stress in the banking industry, I saw a bumper sticker that read: “Don’t tell my mother I’m a banker. She thinks I play the piano at a bordello.” Bank-bashing has once again become a popular sport with little, if any, distinction made between the great majority of well-capitalized, customer-focused and community-minded commercial banks who have acted responsibly, and the few institutions — primarily in the investment banking industry — that have become poster children for excessive risk-taking and eye-popping compensation practices.
Many traditional bankers have grown tired of the high-pitched ranting by media “talking heads,” politicians and others who overnight have become self-proclaimed authorities on banking. Here are a few of the questions being asked, and some answers you’re not hearing: Read More
Rethinking: FDIC Insurance
While benefits of FDIC insurance can be debated, especially in this economic climate, insurance on certificates of deposit (CD) and bank accounts provides needed relief to the individual investor. Created in 1933 in response to the bank losses suffered during the Great Depression, FDIC insurance guarantees individuals’ bank deposits, currently up to $250,000 for each deposit in a single bank. Today, an individual can use the insurance to buy a CD knowing that their money is protected up to $250,000 until December 2013.
In addition to bank deposits, FDIC insurance carries over to some of the more conservative investment options as well. Read More
Understanding and Improving Auctions
One of the main differences of Zions Direct, when compared to most other brokerages, is our focus on fixed-income products. Part of this is apparent in our Bonds for Less offering: a large selection, low commission fees, and institutional pricing (which allows retail customers to get the same pricing that large organizations get when buying bonds).
The other major part of the Zions Direct approach is our auction platform. Zions Direct Auctions is an innovative tool that allows regular individuals to help price the offered securities alongside institutions, and each bidder, big or small, can purchase each fixed-income product at the same price—a welcome change toward transparency and accessibility in an often confusing financial system. Read More
Secondary Corporate Bond Auctions
For years, Zions Direct has been a leader in offering corporate bonds to retail customers at institutional prices. This week, Zions Direct has expanded that approach with the announcement of their first auction of secondary market corporate bonds. This innovative approach to selling corporate bonds allows retail and institutional investors to set the yield through a competitive bidding process, in contrast to the typical approach in which a broker/dealer sets the offering yield. Read More
Market Risk and Volatility
Market risk is a chance that an investor takes. No matter what the long-term prospects of an investment or its probable intrinsic value, an asset may trade at any price in the market. A trading price is determined by the interactions of buyers and sellers. If there is more buying than selling of an asset, its price will rise; if there is more selling than buying, its price will fall. This means that an investment’s price can rise, fall and bounce around. The extent of these movements is usually described by the term volatility. Read More
Rising Consumer Confidence
With consumer spending representing 70% of the U.S. economy, rising confidence levels are important. The Conference Board’s latest monthly measure of consumer confidence rose sharply to 39.2 in April, versus 26.9 in March. The index is based on a representative sample of 5,000 U.S. households.
The latest measure was the second consecutive rise, and was at its highest level since last November. In contrast, the index hit a record low in February near 25.
We still have a long way to go. For the index, 1985 equals 100. The index averaged 57.9 in 2008 and was at 90.6 in December 2007, the month the economy officially entered the recession. Read More
Strength in a Continually Challenging Economy
On April 20, 2009, Zions Bancorporation, the holding company for Zions Bank, reported a loss of $832.2 million, or $7.29 per diluted common share. Reflected in these results are the continued effects of the worst financial and economic downturn our country has seen in many years.
While the reported loss for the first quarter is significant, it is important to take a look inside the results to get an accurate picture of the strength of the company’s core banking business. Of the reported loss, $634 million ($5.55 per common share) is a noncash accounting matter — writing off an intangible asset called “goodwill.” The writing off of goodwill occurred in Zions’ Texas affiliate, Amegy Bank, and primarily reflects the decline in market values of peer banks in Texas and a weaker economic outlook for the state. Amegy Bank itself continues to demonstrate solid performance. Read More
Similar Numbers … Different Stories
The American economy contracted at a 6.1% real (after inflation) annual rate during 2009’s first quarter, very close to the 6.3% real annual rate of decline during the prior quarter…
…that’s where the similarity ends
While the fourth quarter’s various economic components were almost all scary, the more recent data had numerous elements of optimism as to where we go from here…
…the overall message is that this painful recession has about run its course, with a return to positive (yea!) if modest U.S. economic growth perhaps by late summer, one reason stocks continue to move higher Read More
