Fi$callyFit

Fear of the Unknown Driving the Stock Market

2011-07-28T20:30:00.001-04:00

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

The other day, Wed., July 27, was the first real day where I saw some very heavy and indiscriminate selling in the markets. More than 10 stocks were down for every one that advanced. The same mass exodus was seen in the volume of stocks going down versus up.

Every single U.S. sector I follow closed in the red. All countries outside the U.S. with the exception of Mexico closed lower. People were heading for the exits.

But action like this has been seen over and over and over. So far, there has been nothing atypical about the three day decline in stocks.

And given the selloff, more red is certainly possible over the coming days or so. Since mid June, the Dow has risen from 11,900 to 12,800 and back to 12,300.

It would not be shocking, worst case, for stocks to revisit 11,900 again before regaining their footing and heading to new highs. That forecast remains unchanged. I remain of the belief that the stock market will resolve itself for at least one more run to new highs that will be based on what is becoming a record corporate earnings quarter with the exception of Bank of America. As such, until proven otherwise, I believe pullbacks are buying opportunities.

This whole deadline reminds me of how the media played up the first Persian Gulf War when Iraq invaded Kuwait in the summer of 1990. And if we didn't learn from that, the same thing happened in 2003 when we invaded Iraq. Markets typically sell the rumor and by the news.

I recall recuperating from surgery on my parents' couch in January 1991. At that time, just three years in the business, my plan was to buy after war broke out and the market collapsed. But as the first missiles began to fly on January 17 (?), 1991, stocks around the globe surged and launched a new bull market. While I do not believe the exact same scenario will play out here, I think most rational people believe that the looming "crisis" will be resolved sooner than later and the markets will shift their attention back to Europe and Q2 earnings.

Frustration, anger and name calling aside, I still think that those idiots in government (sorry, I couldn't help myself) will find a way to compromise and meet somewhere in the middle before any real carnage is done.

Regarding our investment strategies, and you are always welcome to disagree, our models do not take into account geopolitical news of the moment. I believe that is a losers game and I don't know anyone who successfully manages money based on today's headlines. Our models are not infallible, but I think they have done a pretty good job over the years. I continue to rely on them to navigate us through the stormy seas we occasionally hit. Keep in mind that the S&P 500 currently sits just 4.5% off its multi-year hit! Yes, I know, that's for now.

Feel free to email me with any questions or comments at Paul@investfortomorrow.com.

Until next time…

Paul Schatz

Heritage Capital LLC
http://www.investfortomorrow.com/
http://RetirementPlanningConnecticut.com/

Follow us on Facebook at www.facebook.com/heritagecapital and on Twitter @Paul_Schatz

Still Riding the Bullish Wave

2011-07-22T09:28:00.001-04:00

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

I am going to spend my time this week staying with the theme from the past few weeks, my bullish forecast for the stock market.

Although this phrase always applies, it’s certainly been an interesting few weeks, especially on the geopolitical front with the debt crisis deadline looming, Greece, Ireland, Spain and Italy along with the plethora of poor economic reports.

Yet with all this being shoved down our throats 24/7 by the media, the major stock market indices are one or two strong days away from multi year highs. It’s been the epitome of resilient.

For the past month, I have leaned heavily on the bullish side of the argument for stocks. I won’t bore you with the facts, evidence and opinion, but my forecast flew in the face of conventional and generally accepted, just the place I am comfortable trafficking, in the minority.

But to be fair, if I was going to be wrong, I laid the case out last week from a technical perspective.

The chart above from last week has been updated and remains an open possible scenario for the bears if the S&P 500 is able to close a few days below the neckline. Given the strength this week, it would be a long drop just to get to the line in the sand, let along pierce it. If and when the S&P 500 closes above the area labeled “right shoulder”, the head and shoulder pattern for the bears will be null and void, something I continue to believe will occur this quarter.

The other negative technical chart pattern can be seen below, the island top. And like the head and shoulders chart, the island top is very close to breaching its own line in the sand, which would nullify the potential negativity of the pattern.

As I have already mentioned over the past few weeks, the Russell 2000 (small caps), S&P 400 (mid caps), high yield bonds and the Dow Jones Transports scored all time highs at the April market peak along with the Advance/Decline line, a cumulative measure of the number of stocks going up and down each day.

On the fundamental front, something I am certainly no expert in, S&P 500 earnings are growing faster than the S&P 500 index. That means the market is getting cheaper even though it is still rising. We are actually seeing price/earnings multiple compression rather than the usual expansion. It is highly unusual for a bear market to begin with so many positives at a market peak.

Taking a longer-term perspective, something I am not usually known for doing, the NASDAQ 100 continues to give off some very positive vibes. This index is made up of the 100 largest non-financial stocks on the NASDAQ and is dominated by tech giants Apple, Intel, Google, Microsoft , Oracle and Cisco. As you can see below, the index is quietly and without fanfare bumping up against fresh 10 year highs!

Looking out even further gives you a sense of how much upside room there is before all-time highs can be seen. In case you forgot, the Dotcom bubble high from 2000 is another 100% from here. I remember quipping on Bloomberg TV that whatever high the NASDAQ was putting in wouldn’t be seen again in my lifetime. I certainly hope I live a very long life and will be able to see that peak eclipsed sometime in the 2020s or 2030s.

Last week I closed with:

'Given all the positives listed earlier against the negatives from the charts, the easiest thing to do would be to move to a neutral stance. And maybe that means we are in for some sideways activity. "Play it safe", if you will, with all the negative news from the debt ceiling debacle to Italy and Ireland and Greece. But I have never been to one to seek the easy way out. I continue to believe that the major stock market indices are going to resolve themselves to the upside and score new high closes this quarter. And that's the way I plan to invest until proven otherwise.'

And I still feel the same way now. The stock market has had a nice run this week and while it certainly deserves a rest, I think any pullback is a buying opportunity until proven otherwise. The first thing that would concern me is if the major indices closed below the low we saw on Monday morning July 18.

I hope you stay cool in all this heat. Relief is on the way!

Feel free to email me with any questions or comments at Paul@investfortomorrow.com.

Until next time…

Paul Schatz

Heritage Capital LLC

http://www.InvestForTomorrow.com

http://RetirementPlanningConnecticut.com/

Regulators expand disclosure requierments when credit is denied or revoked

2011-07-15T15:00:00.001-04:00

The Board of Governors of the Federal Reserve System is expanding the mandates of the Equal Credit Opportunity Act, which requires a creditor to notify an applicant when an extension of credit is denied, based in whole or in part on information in a consumer report.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, consumers who are denied credit or whose existing credit arrangement becomes less favorable - or even worse - gets revoked, based on a credit score will be able to get free access to that score and other related information.

The creditor will have to provide a statement giving the reasons for taking an adverse action against the consumer and also a notice that discloses the applicant's right to a statement of reasons, right to a free credit report and right to dispute the accuracy or completeness of information in the consumer report used by the creditor to make a lending decision.

Under the Fair Credit Reporting Act, consumers also are entitled to know the numerical credit score used in making the credit decision; the range of possible scores under the model used to generate the score; up to four key factors that adversely affected the consumer's credit score; the date on which the score was generated; and the name of the person or entity that provided the score.

The changes take effect July 21.

The Equal Credit Opportunity Act makes it unlawful for creditors to discriminate on the basis of sex, race, color, religion, national origin, marital status, age or because all or part of an applicant's income derives from public assistance.

Up? Down? Sideways?

2011-07-15T11:58:00.002-04:00

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

In the past two Street$marts as well as on this blog, I have pounded the table that the odds heavily favored a market rally. I thought that we were just seeing the fourth 4-8% pullback since the major low on July 1, 2010 and the bulls were about to pounce. When so many people emailed, called and interviewed with the opposite forecast, I felt even stronger that higher prices were in order. And the market did not disappoint!

Longer-term, the Russell 2000 (small caps), S&P 400 (mid caps), high yield bonds and the Dow Jones Transports scored all-time highs at the April market peak along with the Advance/Decline line, a cumulative measure of the number of stocks going up and down each day. On the fundamental front, something I am certainly no expert in, S&P 500 earnings are growing faster than the S&P 500 index. That means the market is getting cheaper even though it is still rising. We are actually seeing price/earnings multiple compression rather than the usual expansion. It is highly unusual for a bear market to begin with so many positives at a market peak. In April 2010, we saw the same thing, but had to endure a 17% correction before more new highs were seen.

One possible scenario that worried me during the rally was that the market was going to make it difficult and stop short of new highs and begin to rollover. People who trade and invest by using charts would call that formation a Head and Shoulders Top. Only when the index breached the blue neckline and closed below it, would the pattern be confirmed and much lower prices would ensue.

Additionally, as you can see below, chartists are also screaming about another negative pattern called an Island Top where there is a "lonely" day of trading isolated above the day before and after.

Given all the positives listed earlier against the negatives from the charts, the easiest thing to do would be to move to a neutral stance. And maybe that means we are in for some sideways activity. "Play it safe", if you will, with all the negative news from the debt ceiling debacle to Italy and Ireland and Greece. But I have never been to one to seek the easy way out. I continue to believe that the major stock market indices are going to resolve themselves to the upside and score new high closes this quarter. And that's the way I plan to invest until proven otherwise.

Feel free to email me with any questions or comments at Paul@investfortomorrow.com.

Until next time…

Paul Schatz

Heritage Capital LLC

http://www.investfortomorrow.com/
http://RetirementPlanningConnecticut.com/

No "Buts" Here...That Was Some Rally

2011-07-08T07:48:00.001-04:00

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

The second quarter of 2011 was characterized by weakening economic data and the reemergence of the sovereign debt problems in Europe, especially Greece.

For much of June in my weekly Street$marts newsletter and last week on this blog, I wrote about how bad the headlines have been with Greece, Europe, awful employment numbers, Case-Shiller home price index at fresh 9 year lows and the Fed's Quantitative Easing II was coming to an end on June 30. It certainly felt like the stock market should be down 10-15%, if not more. Yet when you look at the chart below, the market completed its fourth 4-8% normal and healthy pullback since the major low on July 1, 2010.

You can also see from the chart that the S&P 500 touched the dark blue line, which represents the average price of the last 200 days. It is not uncommon for the market to visit this long-term trend gauge during periods of weakness. Interestingly, the 1250 area in pink on the chart was not breached during the decline. That's one thing that did surprise me. Typically, when the masses become so focused on a certain level, the market has a funny way of running through that number for a day or two, causing investors to take action and then reversing in the opposite direction leaving many people holding the bag. This is called a trap.

As I wrote about last month, the impending (and current) rally would be fueled by sentiment shifting from exuberant to despondent after only an 8% decline. Newsletter writers, often wrong at turning points, had become almost uniform in calling for a market correction after we had already seen a 6% pullback. Option players, especially smaller ones (usually mom and pop) were positioning for a correction, seeking the protection of put options after stocks were down 6%. That group is usually wrong when there is a strong consensus.

Technical measures, like the advance/decline line, up/down volume and their derivatives had become as oversold as at any point since the bull market began. Intra-day gauges we created and use in-house were showing some mass selling right near the bottom.

On the flip side, buying by corporate insiders began to pick up after only a 5% decline. This group may be wrong in the short-term, but they usually get it right the longer out you look. At the April stock market high, we saw junk bonds, the advance/decline line, Dow Transports, Russell 2000 and S&P 400 all score all-time highs with the Dow, S&P 500 and NASDAQ at multi year highs. Although that doesn't insulate the markets from a decline or correction, historically, bear markets do not begin with so many positives at a peak.

So as I write this, we have now seen 8 straight days and 11 out of the last 13 where the bulls won the battle. That is unusually powerful momentum. During bull markets after a decline, that is confirmation of new leg higher beginning. During bear markets, a move like we have seen is best sold in to. Contrary to the emails I have received and arguments from my peers, we are still in a bull market folks. And with the Dow Transports scoring an all-time high today, we have further confirmation.

From here, we need to keep an eye on which sectors are leading and make sure all of the major indices also make new highs, including high yield (junk) bonds. Friday at 8:30 a.m. is the release of the monthly employment report. With stocks coming so far, so fast, I would expect a strong opening to be viewed as a good very short-term selling opportunity for the market to gather itself, a pause to refresh if you will.

FYI, I will be on CNBC’s Worldwide Exchange on July 13 at 5:35am.

Feel free to email me with any questions or comments at Paul@investfortomorrow.com.

Until next time…

Paul Schatz

Heritage Capital LLC

http://www.InvestForTomorrow.com

http://RetirementPlanningConnecticut.com/

People's United completes acquisition of Danvers Bancorp

2011-07-01T13:15:00.000-04:00

People’s United Financial, Inc. announced today the completion of its acquisition of Danvers Bancorp, Inc, a $2.9 billion bank holding company based in Danvers, Massachusetts.

Danvers Bancorp’s sole subsidiary, Danversbank, has 28 branches in the Greater Boston area. The total consideration paid by People’s United will be comprised of approximately 18.5 million shares of common stock and $214.5 million in cash.

“We are pleased to welcome our new customers and employees to People’s United Bank as we expand and deepen relationships in the greater Boston market, the nation’s 10th largest MSA,” said Jack Barnes, president and chief executive officer of People’s United. “As the largest bank headquartered in New England, we look forward to offering increased lending resources and additional products and services to our new customers in New England’s largest market."

People's United reports approximately $28 billion in assets, provides consumer and commercial banking and wealth management services through a network of 370 branches in Connecticut, Vermont, New Hampshire, Massachusetts, Maine and New York.

The Rally is Here, but...

2011-07-01T11:57:00.003-04:00

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

The Rally Is Here, But…

Last week, I spend some time with the folks at Yahoo! in New York taping two segments for their Yahoo! Finance show Breakout. What a great time! The first segment pretty much spells out my view of the stock market: Bull Market or Bust.

If that segment wasn't controversial enough, the second segment, Bye Bye Euro, is about my long-term view that the Euro currency will cease to exist in the next 10 to 20 years. As I have mentioned before, it's all about the "haves and the have nots". While North Carolina may want to help save South Dakota, it's very difficult for the country of Germany to want to bailout Ireland or Spain or Portugal. And the countries in need want help on their terms, not austerity rammed down their throats.

The stock market certainly has done its best to confound the masses, as it usually does. The decline from the April peak pushed the envelope of what I call the normal, routine and healthy 4-8% pullback, but so far, that's exactly what it has been, 8% from high to low. I certainly did not think it would get to 8% and perhaps I have been a bit too complacent about it. But as I have done my whole career, I follow our models and the evidence at hand.

Over the past few weeks, stocks haven't done much, but the headlines continue to make it feel like the economy and markets are falling off the cliff. I think it is all part of a more complex bottoming process, which is usually required the deeper a decline goes. Between Greece and jobs and the debt ceiling and housing and QEII ending, it's tough to read the news. I would argue that if things are really as bad as the news suggests, stocks should be down a whole lot more than 8%. Judging from the action this week, that process appears to have ended with a rally beginning.

As most of you know, we use technical and quantitative inputs in our work as opposed to fundamental inputs. At the lows of the past few weeks, the stock market is now more oversold than it has been since the bull market began in 2009, even more so than during last spring's 17% correction.

Some of you may argue that we are no longer in a bull market and that's why the oversold readings don't matter as much. Given that the number of stocks advancing and declining (A/D line) hit an all time high in April along with junk bonds, that would be highly unusual. Even if that's the case, which I am not willing to concede on June 30, there is still supposed to be at least a failing rally.

My premise has been that from this decline, we will learn what kind of market lies ahead for the second half of 2011 based on the quality of the next rally. Which indices and sectors are leading and lagging. Is there broad participation? How do junk bonds and small caps, barometers of liquidity, behave?

Over the past few weeks, we have a whole host of indicators pointing to a bottom. The number of stocks advancing and declining on a daily basis is very washed out, too much selling too quickly. Most of the derivative indicators, like the McClellan Oscillator, are saying the same thing.

Volatility has increased dramatically from very low levels. Usually, it pauses or reverses after such a rise. According to AMG, investors have drained incredibly large amounts of money from equity mutual funds recently. At the same time, option traders on a variety of exchanges are becoming very defensive. Small option traders, usually mom & pop traders, have gone from exuberant to despondent in just a few weeks.

On an intra-day basis, we are seeing rolling large blocks of liquidation hitting extreme levels where rallies often begin. On the flip side, buying by corporate insiders has increased substantially and they are usually not wrong for very long. Add it all together and you get the recipe for a good stock market rally.

After a 6% or 8% pullback with the slew of indicators pointing to a low, we should be seeing constructive price action with at least some upside follow through. Until last Thursday, that was sorely missing. We now have a number of positive behavioral days with some follow through confirmation as you can see below.

SO much attention has been paid to the level of 1250 on the S&P 500 (the March tsunami low), I was hoping for a quick plunge through that level to shake out the final bulls. Twice, price came closer, but no cigar. In a perfect world, price dives through 1250 for a day or so and causes more selling that makes headlines, only to see the bulls step up to reverse the trend and start a powerful that rally to trap the bears as the I tried to depict in the next chart.

On the surface, I believe a break of 1250 is more constructive for a longer and more meaningful rally than if the rally has already begun. A rally from here will leave unanswered questions and keep a scenario open for a decline below 1250 sometime during the third quarter.

FYI, I will be on CNBC’s Squawk on the Street on July 5 at 9:35 a.m.

Have a very safe and enjoyable holiday weekend!

Feel free to email me with any questions or comments at Paul@investfortomorrow.com.

Until next time…

Paul Schatz
Heritage Capital LLC

http://www.investfortomorrow.com/
http://RetirementPlanningConnecticut.com/

Follow us on Facebook at www.facebook.com/heritagecapital and on Twitter @Paul_Schatz

Ramblings on the Debt Crisis

2011-06-24T16:00:00.001-04:00

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

I have been asked a lot about the upcoming debt ceiling "crisis", how it would affect the markets and if we should position differently.

Maybe I am too complacent, but at this point I do not believe there is anything serious brewing. I firmly believe that it's just another game of political chicken and someone will blink.

Or maybe both sides blink. But I do not think that Congress gets to the point where they vote down a rise in the debt ceiling. That's an untenable position for a politician.

As an aside, I have heard several unconfirmed reports that it is unconstitutional to default on our debt. If that's true, I am sure the lawyers have lined up their cases. From my seat, the politicians will probably go to the 11th hour and then make a deal.

There have so many opinion pieces written about what to do about our debt and budget deficit. I have written much about this before, so I don't have a lot of new info. I firmly believe this has to be a bi-partisan solution. Congress cannot cut too much too quickly or we will end up in recession very soon. They can't do nothing because at this rate, there will be a debt crisis.

I believe we need to cut $100B - $150B every year for at least the next decade. While that could stymie growth a bit and make us look more like Europe, there would be a light at the end of the tunnel. If we get a little luck, organic growth would increase tax receipts and help even more.

Michael Boskin, former chairman of the council of economic advisors under Bush I, wrote a good piece last week in the Wall Street Journal regarding budget cuts and tax increases. The vast majority of the time (I think he put the number at 75%), tax increases do not lead to increased tax receipts, something I have long believed. Boskin opines that a workable ratio is $4 or $5 in budget cuts for every $1 in tax increases. I think that could be politically tenable and a decent bi-partisan solution.

I also believe that we are in dire need of tax reform. We desperately need to simplify the tax code. Broadening our tax base is a good start. Maybe that's a euphemism for a tax increase, something I have a hard time swallowing, but I don't think so. Our system is broken and needs repair. When someone making 10 million dollars is paying less tax than someone making what is now considered "rich" - $250,000 -something is really wrong.

Let's get rid of the absurd deductions that only the truly rich can take advantage of because they can afford the expensive lawyers to find loopholes. At the same time, we can actually cut the number of tax brackets and tax rates. With the energy and agricultural sectors booming like never before, I have a hard time swallowing tax breaks and worse, subsidies. But with lobbyists running Washington, that's a tall order to correct.

In this country it's still amazing that only about HALF actually pay income taxes. Yes, that's correct. Roughly 50% of Americans pay income tax. At the same time, given what you read in the media, you would think that the lower income earners are footing the bill for everyone else. It's simply not true. The ever shrinking, but much needed, middle class bears the brunt. When the middle class starts to grow again, you will know that our economy and country has embarked on another multi decade run of prosperity.

Feel free to email me with any questions or comments at Paul@investfortomorrow.com.

Until next time…

Paul Schatz
Heritage Capital LLC
http://www.investfortomorrow.com/
http://RetirementPlanningConnecticut.com/

Follow us on Facebook at www.facebook.com/heritagecapital and on Twitter @Paul_Schatz

Questions to Ask Before You Consider Moving Assets to Another Advisor

2011-06-16T23:24:00.000-04:00

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

A fact of life every adviser faces is the knowledge that our clients regularly receive solicitations from other advisers, money managers, brokers and investment companies.

Some clients will leave to take advantage of those offers. What really hurts, however, is seeing former clients damaged by poor advice, or advice that does not take into consideration the client’s situation.

With that in mind, we present questions you should ask of any adviser who solicits your confidence and the management of your financial assets:

What is the adviser’s experience and how will your assets be managed?
Don’t just accept the adviser’s word. Verify.

Information on a Registered Investment Adviser can be found throught the Securities Exchange Commisison (SEC). Information on brokerage firms and individual brokers can be found here. If the individual is not registered, it is a red flag.

If the individual uses a particular investment approach, find out how long it has been in use and what the results are. Results too good to be true usually aren’t.

How will your assets be held?
Ideally, your assets should be invested in a separate account in your name at a national custodian or brokerage firm. You should be able to independently verify the status of your account. Your adviser should have no access to funds in the account other than a preauthorized ability to withdraw periodic fees. If you do not have transparency, your risk increases. Deposits should never be made out to the individual.

How is the adviser compensated?
Does that compensation present a possible conflict of interest? If the individual is paid to solicit your investment in a specific money manager or investment vehicle, is their advice unbiased and in your best interest?

Has the adviser asked the right questions?
Your adviser should understand what you want to accomplish and how a recommended investment fits with your financial situation. You don’t want an adviser who is selling a solution without finding out what you need.

Is the recommended investment appropriate for you?
You know best what you need in terms of capital preservation, how much and when you will need income from your investments, liquidity, ability to pass on to heirs, etc. If the individual is not asking you about those needs, you need to ask those questions. Make certain you understand the answers and preferably have them in writing. Verbal promises and assurances are not enforceable in court.

If the investment does not work out as anticipated, what is the individual’s exit plan?
Will they strive to protect your investment or are you on your own once you invest?

How much will it cost to implement the new adviser’s solution?
If you are required to liquidate assets, what costs will be incurred liquidating those assets?

This is particularly important when liquidating insurance products. Has the new adviser given any consideration to capturing dividends prior to selling assets? What will it cost to purchase recommended investments? Will those investments be liquid or will you have to commit to a holding period?

And then, ask yourself why you are considering the new adviser.
If you are dissatisfied with some aspect of our services, we would like an opportunity to talk to you about the issue before you make any changes. If your answer is because you like the individual, you want to help them out or you feel pressured to make the change by the individual or another adviser, step back and give yourself time to reconsider your decision.

Your first priority should be the safety and profitability of your assets. There will always be another opportunity to invest in the next greatest thing as long as you have not lost your assets on a poor decision.

Feel free to email me with any questions or comments at Paul@investfortomorrow.com.

Until next time…

Paul Schatz

Heritage Capital LLC

http://www.InvestForTomorrow.com

http://RetirementPlanningConnecticut.com/

Thomson Reuters Sentiment Index: Health care consumer confidence steadied in May

2011-06-16T23:06:00.000-04:00

Americans’ confidence in their ability to access and pay for health care improved in May, according to a consumer sentiment index produced by Thomson Reuters.
Respondents surveyed for the index reported an improved outlook when asked if they had experienced a reduction in or loss of insurance coverage in the past three months. Overall, the Thomson Reuters Consumer Healthcare Sentiment Index rose three points from 95 in April to 98 in May, a statistically significant increase.

“This recovery in confidence is encouraging when compared with last month’s numbers, but the month-to-month variability in sentiment could be an indication of underlying uncertainty among health care consumers,” said Gary Pickens, chief research officer at the Thomson Reuters Center for Health care Analytics.

The index, which is based on the Thomson Reuters PULSE™ Healthcare Survey is updated monthly.

The Thomson Reuters PULSE Healthcare Survey collects information about health care behaviors, attitudes and utilization from more than 100,000 U.S. households annually. It is representative of all United States adults and households. The Consumer Healthcare Sentiment Index is based on responses from a survey subset of 3,000 respondents each month. Its baseline measurement of 100 was set in December 2009.

IRS grants go to Quinnipiac University and UConn

2011-06-16T23:02:00.000-04:00

The Internal Revenue Service has awarded nearly $10 million in matching grants to Low-Income Taxpayer Clinics (LITCs) for the 2011 grant cycle, including two recipients from Connecticut.
The IRS awarded $75,000 to Quinnipiac University in Hamden and $88,000 to the University of Connecticut's Greater Hartford campus.

LITCs are organizations that represent low-income taxpayers in federal tax controversies with the IRS for free or for a nominal charge and/or provide tax education and outreach for taxpayers who speak English as a second language.

Through the LITC program, the IRS awards matching grants of up to $100,000 a year to qualifying organizations.

Questions about the LITC Program can be addressed to the LITC Program Office at (202) 622-4711 (not a toll-free call) or by e-mail at LITCProgramOffice@irs.gov. IRS Publication 4134, Low-Income Taxpayer Clinic List, provides information on LITCs in each geographic area and the languages each clinic serves in addition to English.

The 6 Week Nap

2011-06-10T09:30:00.003-04:00

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

Imagine you have been asleep for six weeks and just woke up. The stock market has declined five straight weeks, a rare occurrence, and is working on six today.

The sovereign debt crisis in Europe is percolating again with Greece, Ireland and Spain teetering. Last Friday's employment report, as you can see below, showed very few jobs being created in May with unemployment ticking slightly higher again. As I have mentioned before, if this was a normal recovery, job growth would be soaring right about now. Since mid 2010, we are more like hovering.

Bernanke & Company's QEII, which pumped $600B into the system will be ending in a few short weeks. And the S&P Case Shiller Index of home prices just hit an eight year low. Yes, you read that right. Home prices, except the ones we are trying to buy, continue to make post crisis new lows and are back to levels not seen since 2002 and 2003.

You would be hard-pressed to "feel good" right now. One would have thought that stocks would be down 10-20% with this horrible backdrop. But they are not. From high to low, the stock market has pulled back 6%, yet another 4-8% pullback that I keep discussing.

If you add in the somewhat extreme nature of the selling wave along with the surge in investors buying protective put options and newsletter writers more bearish than bullish for five consecutive weeks, you have all the makings for at least a short-term low. I am going to stick my neck out and say that the bottom is not in place yet and will likely need one more selling wave to hammer in.

My theme for a while has been that there should be at least one more stock market rally left IF there is a big correction coming in Q3. I still believe that. All the makings are there. Failure to rally in the coming weeks would usher in some not so pleasant memories of bear markets passed, which would mean sharply lower prices very soon. But we can cross that bridge if and when it happens.

FYI, I will be on CNBC’s Squawk Box at 6:10am on June 13.

Feel free to email me with any questions or comments at Paul@investfortomorrow.com.

Until next time…

Paul Schatz

Heritage Capital LLC

http://www.InvestForTomorrow.com

http://RetirementPlanningConnecticut.com/

Merchant win over banks on debit card fees not so clear for consumers

2011-06-08T18:25:00.000-04:00

By FI$CALLYFIT and the Associated Press

WASHINGTON — Merchants triumphed over bankers in a battle for billions Wednesday as the Senate voted to let the Federal Reserve curb the fees that stores pay financial institutions when a customer swipes a debit card. It was murkier, however, whether the nation’s consumers were winners or losers.

As a result of the roll call, the Fed will be allowed to issue final rules on July 21 trimming the average 44 cents that banks charge for each debit card transaction. That fee, typically 1 to 2 percent of each purchase, produces $16 billion in annual revenue for banks and credit card companies, the Fed estimates.

The central bank has proposed capping the so-called interchange fee at 12 cents, though the final plan could change slightly.

Frank Keating, president and chief executive officer of the American Bankers Association said the ABA "along with the thousands of community banks we represent, is deeply disappointed with the outcome of today’s Senate vote."

American consumers will now have to pay more for basic banking services and community banks also will suffer, he said. "They will see a reduction in a key source of revenue that allows them to offer low-cost banking services to everyday consumers and supports lending and fraud protection measures. Key banking regulators have unequivocally stated that small banks will be harmed by the underlying Durbin amendment. It is simply unconscionable that the Senate would not act to protect community banks from this destructive effect," Keating said.

Victorious merchants said the lowered fees should let them drop prices, banks said they could be forced to boost charges for things like checking accounts to make up for lost earnings and each side challenged the other’s claims.

Consumer groups were not a united front, either: While the consumer group U.S. PIRG said consumers would benefit, the Consumer Federation of America took no formal stance but said it was concerned about what both industries might do.

Travis B. Plunkett, the consumer federation’s legislative director, said the amount of savings that stores pass on to consumers would depend on how competitive their markets are. He said he also worried that the Fed’s current proposal might be too restrictive, which might tempt banks to “use that as an excuse to increase charges on customers they value the least, low- to moderate-income customers.”

In Wednesday’s vote, senators trying to thwart the Fed’s rules needed 60 votes to prevail but fell six votes short, 54-45. That delivered a victory for Sen. Richard Durbin, D-Ill., the Senate’s No. 2 Democrat, who muscled the provision into last year’s financial overhaul law requiring the Fed’s action.

Wednesday’s roll call shot down a proposal by Sens. Jon Tester, D-Mont., and Bob Corker, R-Tenn., that would have delayed the Fed rule for a year. In the meantime, the Fed and three other agencies would have studied whether the Fed’s current proposal is fair and rewritten it if at least two agencies decided it wasn’t.

Edmund Mierzwinski, consumer program director for US PIRG, which represents state public interest research groups, said some banks might curtail the rewards programs that many attach to their debit cards, such as awarding cash back or airline miles. But he said checking account fees would not rise.

“There will be competition,” Mierzwinski said. “Banks will be forced to come up with innovative ways to lower costs in their card networks.”

Camden R. Fine, president of the Independent Community Bankers of America, challenged that, saying the Senate vote would mean that “consumers of lower socio-economic status will get hammered” because bank fees would rise.

“Where do people think banks get the money to subsidize these products” like free checking accounts, he said. He also challenged assertions that stores would pass the savings from lower fees to customers.

“Does anybody not smoking dope believe merchants will pass some big windfall to consumers?” he said, adding later, “I mean, what are they going to cut prices by, a penny?”

Merchants, however, argue that they will be forced to lower prices to reflect the curbed debit card fees.

“The retail industry is the most competitive business environment going today,” said Brian Dodge, spokesman for the Retail Industry Leaders Association, which represents many large merchants like Target and Home Depot. “There is no doubt competition would drive any interchange savings out of the system, which would be reflected by lower prices.”

Affirming that was Dennis Lane, who has owned a 7-Eleven store in Quincy, Mass., for 37 years. He said he pays $7,000 to $10,000 annually in credit card swipe fees.

“Whenever I can reduce my cost of doing business, any responsible retailer reduces costs to the consumer,” he said. He also said those savings could allow him to hire summer workers.

On the other hand, the head of a credit union in Mountain Home, Idaho, said slashing debit cards fees would have a huge cost for his business.

Curt Perry, president of Pioneer Federal Credit Union, says cutting the fee to 12 cents per swipe would cost him $780,000 a year. The new fee system would not take into account such expenses as covering fraud, which he said cost him $170,000 last year, leaving him considering options like charging a fee for debit cards or checking accounts.

“We’d have to pass that on, we’d need to generate that revenue from somewhere,” he said.

Save your receipts: Summer day camps may reap tax benefits

2011-06-03T21:00:00.001-04:00

Many working parents must arrange for care of their children age 12 or under during the school vacation period.

A popular solution — with favorable tax consequences — is a day camp program. Unlike overnight camps, the cost of day camp may count as an expense toward the Child and Dependent Care Credit.

Here are five facts the Internal Revenue Service wants you to know about a tax credit available for child care expenses:

The Child and Dependent Care Credit is available for expenses incurred during the summer and throughout the year.
An expense for an overnight camp does not qualify.
If your childcare provider is a sitter at your home or a daycare facility outside the home, you'll get some tax benefit if you qualify for the credit.
The actual credit can be up to 35 percent of your qualifying expenses, depending upon your income.
You may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.

For more information check out IRS Publication 503, Child and Dependent Care Expenses. This publication is also available by calling 800-TAX-FORM (800-829-3676).

Painful Solutions to our Debt Crisis

2011-06-03T08:25:00.000-04:00

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

Last week’s contribution - "Inflation? I Spit in your Face!" drew an interesting question.

How does our national debt factor into the equation of my non systemic inflation argument? The answer is an easy one and somewhat of a copout. It depends on how the government intends to correct our addiction to the debt problem and looming crisis. Debt in itself is inherently deflationary if you agree with the premise that it must be serviced and eventually repaid. The whole process of deleveraging, reducing the amount of debt, is anything but inflationary for individuals and companies as we saw in 2008 on steroids!

Let’s walk through some scenarios on how Uncle Sam can attempt to fix the problem.
One way to eradicate ourselves of debt is print our way out. The Federal Reserve would monetize by essentially printing money and buying up all of the Treasury bonds, notes and bills. As you can imagine, that would flood the system with more money than it has ever seen and likely cause our currency to completely collapse, which would make all assets denominated in dollars (oil, grains and other commodities) skyrocket to crisis levels. It would also likely trigger more systemic inflation with money velocity soaring along with wages.

Think about the million, billion and trillion dollar Zimbabwe notes or the Weimar Republic post WWI with folks using wheelbarrows full of money to buy groceries from always bare store shelves. Dollars would be worth much more today than tomorrow so people would spend them as fast as they came in. Prices and interest rates would rise day after day, week after week and month after month until the crisis abated. The U.S. Treasury and government would also lose credibility and investment grade credit ratings around the world for a measurable period of time. Our economy would likely collapse.

The opposite end of the spectrum would be strict austerity to cure our debt problems. In that case, government spending would be cut, cut and cut some more, triggering rolling recessions with intermittent periods of stability rather than recoveries. In an extreme case, as we’ve seen abroad, strikes, protests and even riots could fill our city streets. It would “feel bad” for an extended period of time, perhaps a decade or more, but the U.S. would emerge with a very lean and competitive society at the end.

The best possible - and most unlikely - scenario to cure our debt problem would come from organic economic growth. By growing the economy, the percentage of debt to GDP would be reduced, not to mention all the added tax revenue that would come in to the Treasury. I don’t think anyone really thinks this can work now.

One proposal in Congress that I totally disagree with is to simply raise taxes on the wealthy to solve the countries addiction to debt. To begin with, I have seen study after study that shows decreased tax receipts from an increase in tax rates. Increasing tax rates generally hinders economic growth. Additionally, roughly 75% of all discretionary spending (cars, travel, non-staple retailers, leisure, etc.) is done by those making $250,000 or more. How do you think that group would react to having their tax rates rise dramatically? In fact, many of those folks are small business owners, which our economy is built on, and run their finances through their personal tax returns. How do you think a sharp rise in taxes would affect their hiring?

Before someone responds by telling me to look at how well the economy did with higher tax rates under Bill Clinton, those were different fiscal times. We did not have a debt crisis or a structural unemployment problem. The ground was very fertile for growth in the mid 1990s following the S&L Crisis and recession of the early 1990s.

Look, in the 1940s, the top tax rate was more than 70 percent! And the economy grew like a weed. I can’t imagine anyone arguing that our economy could survive rates even close to that today. It would be worse than the Great Depression. My belief is that trajectory is more important than the absolute rate. By cutting taxes from 70% to 60%, that is incredibly stimulative. By raising taxes from 30% to 40%, it is highly restrictive.

I have said for three years that we have run out of painless solutions. It’s going to hurt! Pick your poison. If I were in Congress and not beholden to special interests (HA!), I would cut $100B to $150B from the federal budget every year for the next 10 years. No area would be unscathed, including entitlements and defense. That would certainly curtail growth and make us look more like a European country than the U.S.
At the same time, I would completely revamp the tax system and broaden the tax base. Too many people have used gimmicks and loopholes to avoid paying taxes. We need to remove so many of the insane deductions and credits. The time has come. Sorry big oil, but you have made hundreds of billions of dollars over the past decade and your subsidies and tax credits are absurd. Sorry big corporate farms, but paying you not to grow crops is ridiculous when food prices are at all time highs. When we had a glut of crops and the farming industry was on the verge of extinction, I may not have agreed with the subsidy, but I understood. Now it’s an embarrassment.
At the same time, we need to incentivize R&D in cleaner and greener energy, but not superficially as we’ve seen. We really need to make it appealing for entrepreneurs. Look at how many of the great companies were born during a recession in someone’s garage. Anyone know of a company called Microsoft? The government needs to step up and allow that ground to be fertile again.

Finally, I would be naïve if I thought this could get through Congress without any compromise. While I do not believe in higher taxes, especially in the corporate world where companies just park themselves offshore, I understand that there has to be some give and take. On the social security front, I would accept raising the tax rate and the amount where it is capped in return for also raising the age to 70 over the coming decade or so with further increases if life expectancy increases.

So in the end, I believe there is only one scenario where our debt crisis leads to systemic inflation and I do not think that path is likely. We have become a country of instant gratification and whiners, me included. If America is truly going to solve our debt problems and reliance on foreign capital, we are all going to have to sacrifice over this decade.

FYI, I will be on CNBC’s Worldwide Exchange from 5:35 a.m. to 5:55 a.m. on June 7.

Feel free to email me with any questions or comments at Paul@investfortomorrow.com.

Until next time…

Paul Schatz
Heritage Capital LLC
http://www.investfortomorrow.com/
http://RetirementPlanningConnecticut.com/

Follow us on Facebook at www.facebook.com/heritagecapital and on Twitter @Paul_Schatz

7 Practical Gifts for College Grads

2011-06-03T08:15:00.000-04:00

Consumer savings expert Andrea Woroch has been featured as a media expert source on NBC's Today Show, FOX & Friends, MSNBC, ABC News NOW and many more.

Sure, an all-expense-paid trip to Europe seems like the ultimate graduation gift. However, college students who face thousands of dollars in academic debt may need to jump on the job hunt sooner than expected. With new financial responsibilities looming, recent grads will appreciate whatever help they can get.

To help soften the real world blow, here are 7 practical gifts that job-seeking college graduates will appreciate:

Resume Service
The first thing employers see is an applicant's resume and cover letter. Unfortunately, the style of these documents has become more complex in recent years. Graduates won't get noticed using the old method of simply listing experience by date. Cover letters are now approaching works of art, mentioning much more than that applicant is interested in the job and is a good team player, trustworthy and a hard worker.

A resume service will create updated documents so subsequent resumes and cover letters live up to modern standards. Costs run roughly $100 to $200, depending on the services you desire. It's worth paying extra to have an expert explain the latest tricks and how graduates can alter these documents for each job. Sites like ResumeMyCareer can help you compile a professional and competitive resume at an affordable cost.

Home Furnishings

After living with cinder-block bookshelves and saggy mattresses for four years or, worse yet, being surrounded by their childhood furniture while living at home, graduates might appreciate an upgrade on everything from a couch to kitchen implements especially those moving into a new apartment to be closer to their new 9 to 5 job. You might also put together a basket of upscale bed and bath products so the grad can finally dump their dollar-store shampoo and soap.

Gift Cards

The 2011 crop of college graduates faces more debt than any other generation, so money is always a welcome gift, especially to help them get through that first, unstable post-school year. Grads not comfortable with the idea of asking directly for money can create a gift card registry at CardAvenue.com to receive gift cards from hundreds of merchants in a variety of categories from apparel to food, gas and much more.

Job Interview Clothing
Suits can be overkill in some places, unless the graduate lives in a big city or is looking for a management position. Most employers will expect something a bit more casual these days. Men should have a dress shirt, pants and shoes with a matching tie and, perhaps, a sports coat. Women will need a demure outfit of skirt and blouse or dress with basic pumps. A coordinated jacket would nicely complete the outfit.

Foreign Language Lessons
College graduates face a tough job market and with high unemployment rates, that means more experienced competition. Given any opportunity to improve his or her skill set, grads can make themselves more marketable to potential employers depending on the position. Consider gifting Spanish lessons (Rosetta Stone is an effective and affordable option) or perhaps a GMAT review course for help towards MBA school admissions.

Briefcase

Backpacks and messenger bags are great for toting books and water bottles, but grads will have a better chance of securing a job when they show up looking sophisticated. A soft-sided briefcase with room for a laptop, resume binder and lunch will give any job seeker a more professional appearance.

Smartphone

With instant email access and GPS navigation, a smartphone will keep recent grads connected with potential employers and recruiters so they never miss an interview opportunity or an offer. Not to mention, the various apps that offer banking on-the-go, cheap dinner recipes and location-based drink specials to help make their lives a little easier.

Inflation? I spit in your face!

2011-05-27T10:33:00.004-04:00

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

Before I dive into today’s controversial topic, I want to say goodbye to one of the true pioneers in business television, Mark Haines from CNBC’s Squawk on the Street who passed away suddenly this week at the far too young age of 65.

From his FNN days in LA to the CNBC merger to the host of Squawk Box to creating all of the popularly used on air nicknames to his final spot hosting from 9am to 11am, Mark Haines was the consummate professional.

Never shy or intimidated by a guest, Mark would not hesitate to challenge your view and force you to defend your position. With his unique eating habits and flair for the dramatic, Mark Haines was one of the faces of the network. You can Google some of his more interesting moments, like cutting his tie in half, donning an Army helmet during the Dotcom collapse and calling for a stock market bottom in March 2009.

When I started marketing to the media to build my profile in the mid 1990s, one of my long-term goals was to be interviewed as the stock market opened by Mark Haines. Thankfully, I achieved that goal several years ago and have enjoyed every interview with Mark ever since, especially the one where he challenged my view about using different analysis in deflationary times than inflationary times.

I never met Mark Haines in person, but he is someone who has been part of my business life for decades and will be sorely missed. May he rest in peace…

And now to the topic at hand. With so much attention paid to commodity inflation lately, I thought a good item to discuss inflation in general.

Longtime readers have known that since 2007, I have been in the deflation camp, not believing for a minute that serious, structural and systemic inflation was anywhere in our immediate future. And I still share that view today. Comparing this period to that of the 1970s, or Argentina, Zimbabwe or the Weimar Republic is just plain absurd in my opinion.

YES, we have commodity inflation. I agree! But I side with Ben Bernanke that it is more transitory than structural. Real inflationary problems usually have certain DNA markers, such as money velocity in the financial system. Essentially, that means banks take in money and create many, many more dollars from that single dollar. Today, we still see record amount of cash held at the Fed on behalf of the banks. Add to that, more than $1T on corporate balance sheets and you can easily conclude that companies are in no rush to deploy their capital. In other words, a dollar is worth more tomorrow than it is today. That’s the opposite of inflation where a buck is worth more today than tomorrow!

Other systemic items include capacity utilization. While those numbers have climbed from almost depressionary levels below 70, they are nowhere near the 85%+ that would be worrisome as you can see from the St. Louis Fed graph below.

Look out of your window at the housing and job market. With housing stable at best and the average person’s largest asset, you would be hard pressed to offer that there is even the slightest of inflation here. And the employment picture, while much better than in the heat of the crisis, continues to show more than 9% of the workforce unemployed, 10% if you trust the Gallup poll below.

But digging a little deeper, the “real” unemployment rate, taking into account the underemployed and discouraged (U6) is almost 20%, according to Gallup. I am not sure anyone can use this data to support the inflation argument.

Turning to one of the most important measures of systemic inflation, wages and wage growth, you can see below further evidence that supports my thesis that structural inflation is not a problem. Think about what happens when everyone makes more money than last year and the year before. Most people spend it! More dollars chasing the same number of goods and services. So prices rise. When wages fall or stay flat, like they have most of the past 11 years, you have fewer or the same dollars chasing the same number of goods and services. Prices stay flat or fall.

Remember, inflation is measured by price changes on year over year basis. If oil goes up 100% in 2011 and remains at that same level in 2012, inflation is actually 0% in 2012 even though prices are high. It’s the year over year change that signals inflation.

In the end, while it is painful at the pump and at the grocery store, I do not believe that consumer commodity inflation is here to stay and will be a long-term, systemic problem.

FYI, I will be on CNBC’s Squawk on the Street at 9:35am on May 31.

Feel free to email me with any questions or comments at Paul@investfortomorrow.com.

Until next time…

Paul Schatz

Heritage Capital LLC

http://www.InvestForTomorrow.com

http://RetirementPlanningConnecticut.com/

New Haven woman sentenced to 30 months for bank robbery

2011-05-26T15:30:00.000-04:00

NEW HAVEN - David Fein, U.S. States Attorney for the District of Connecticut, announced today that Marta Lozada, 43, of New Haven, was sentenced today by U.S.District Judge Janet C. Hall in Bridgeport to 30 months in prison, followed by three years of supervised release, for bank robbery.

Hall also ordered Lozada to reside in a halfway house during the first 6 months of her term of supervised release.

According to court documents and statements made in court, on February 4, 2010, Lozada robbed a Bank of America branch at 100 Amity Road. She took $4,858, records show.

Silver at the Fork in the Road

2011-05-20T11:00:00.002-04:00

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

In the past few issues of my Street$marts letter and on Facebook and Twitter, silver has been a popular topic.

If you are not following my daily comments and would like to, please click on the Facebook and/or Twitter icons at the bottom of this post. When we left silver not long ago, I showed a series of charts on how bubbles are built and what they look like.

I also explained why they are so difficult to profit from, using Keynes' line that the market can stay irrational longer than you can stay solvent.

From the 2008 bottom. $9 to $50. What do you think? Bubble?

Today, we can easily see below that silver was decimated from $50 to $33 in a little more than a week. Has the bull market ended? Is silver headed back to single digits? It's still too early to tell, but the bull market has been seriously wounded.

It was certainly a back breaker for the bulls as the Chicago Merc, where silver trades, repeatedly raised margin requirements to help put a damper on rampant speculation. And contrary to popular belief, there is no anecdotal evidence that raising margin requirements on commodities causes prices to decline. Volume certainly slows and perhaps volatility recedes, but price is like water. It finds its own level.

Conspiracy theorists are out in full force, believing that this is all part of a grand scheme by the government to confiscate gold and silver holdings of American citizens like FDR did in 1934. If that's even remotely true, why wasn't the margin requirement on gold raised as well? What a far cry from a few weeks ago when that same group (or not) continued reporting that JP Morgan was short the equivalent of all the silver on earth and they were being squeezed to deliver the metal. You can't have it both ways!

As a student of market history, it's helpful to be able to compare current action with that of a similar period in the past. The next chart is from 2006 and shows a similar collapse in silver after a meteoric rise.

At that time, I remember believing that the gig was up and silver was toast for a long while. How wrong I was as the metal digested for more than a year before blowing off to the upside in early 2008.

I think the best way to ascertain where silver is now is to see how it behaves in the coming weeks. After a 34% hit, buyers should support the metal between here and $30. If we begin to see stability and digestion, I will argue that the bull market is not over. However, if we see more selling, especially into rallies that result in lower lows, I think the bull market will be dead as you can see the two possible paths below. The red arrows indicate that a new bear market began and the greens ones indicate a multi month digestion before taking off to the upside again above $50.

FYI, I will be on CNBC’s Squawk on the Street at 9:35am on May 31.

Feel free to email me with any questions or comments at Paul@investfortomorrow.com.

Until next time…

Paul Schatz

Heritage Capital LLC

http://www.InvestForTomorrow.com

http://RetirementPlanningConnecticut.com/

Storm Clouds on the Horizon

2011-05-13T19:00:00.003-04:00

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

Below is a familiar chart of the S&P 500 showing the various 4-8% pullbacks we continue to see. As I write this, the stock market is rolling over to the downside and it certainly has the feel of wanting to sell off more in the coming days.

Rallies are getting shorter and choppier. If we do see more weakness, my initial take can be seen in blue and calls for a move below last week's low before resuming the rally.

Until proven otherwise, I believe this is just another 4-8% cleanse before moving higher. HOWEVER, as I have written about before here and included in my 2011 Forecast, I do not believe 2011 ends up hugely in the black. I think we "borrowed" some of that upside last year.

My concerns now are growing, given that this entire bull market has been surfing a tidal wave of liquidity and the Fed is firm that the torrent will be turned off on June 30. Do I hear QE3?!?! I have serious questions whether the economy and markets can stand on their own two feet without major help (government assistance).

I hope and pray Bernanke heeds the lesson learned in 1937 after the Dow rallied 400% from the 1932 low and all was sanguine in the economy and markets. Back then, the government pulled fiscal stimuli, taxes were increased and interest rates were raised. Most people forget that the Great Depression Part II began with a surge in unemployment and a collapsing stock market. Only a shift to a wartime economy after Pearl Harbor did the U.S. begin the real recovery.

Last spring, as you can see below, we saw what happened when the Fed stopped pumping money into the system. Of course, Greece and the Flash Crash had something to do with it!

IF the stock market is in the process of building a peak this quarter, I think volatility will continue to increase through the end of June. We should see fewer and fewer stocks in healthy shape and more than a few key market sectors not behave well during rallies. I would also imagine that junk bonds and/or small caps would start to underperform, given how sensitive they are to liquidity. In turn, that would set the stage for some unpleasantness (10-20% correction) during the third quarter.

Arguing against this theme is the fact that this is the third year of Obama's term, the strongest of the four year cycle where we have only seen one down year in the past 70-ish years. But as I mentioned already, I think the market borrowed some of the rally last year, which should have been a poor year according to the presidential cycle.

In short, I am not ready to jump ship just yet. We are dancing close to the door, but I think there should still be some more upside after this little pullback exhausts itself in the coming week or two.

FYI, I will be on CNBC’s Worldwide Exchange from 5:30am to 5:50am on May 17.

Feel free to email me with any questions or comments at Paul@investfortomorrow.com.

Until next time…

Paul Schatz

Heritage Capital LLC

http://www.InvestForTomorrow.com

http://RetirementPlanningConnecticut.com/

Pew researchers: Interest rates stabilizing 2 years after CARD Act

2011-05-10T15:50:00.000-04:00

Contrary to predictions, credit card holders are seeing stabilized interest rates, the elimination of over-the-limit penalty charges, a reduction in late fees charged by banks and minimal changes in annual fees since the landmark Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009 took effect, according to new research by the Pew Health Group’s Safe Credit Cards Project.

Pew data show that the median advertised interest rates for purchases on bank credit cards remained unchanged from 2010. Meanwhile, bank cash advance and penalty rates held firm. Additionally, the percentage of cards with annual fees held steady for credit unions at 14% and increased for banks from 14% in 2010 to 21% in 2011. The amount charged for annual fees remained unchanged.

"Pew’s research shows that predictions that the legislation would spark new charges and long-term interest rate growth have not materialized," said Nick Bourke, director of Pew’s Safe Credit Cards Project.

"Whatever increases in advertised interest rates we saw going into 2010 have not continued into 2011. The act created a new equilibrium where interest rates have flattened, penalty charges have declined and a number of practices deemed 'unfair or deceptive' have disappeared. Consumers are enjoying safer, more transparently priced credit cards - and banks and credit unions are able to compete on a more level playing field," he said.

The study, "A New Equilibrium: After Passage of Landmark Credit Card Reform, Interest Rates and Fees Have Stabilized," is the latest in a series of reports from the Pew Safe Credit Cards Project that has examined all consumer credit cards offered online by the nation’s 12 largest bank and 12 largest credit union issuers.

Together, these institutions control more than 90% of the nation’s outstanding credit card debt.

One caveat the study doesn’t address, however, is that most credit cards now carry variable rates, so if the prime rate starts to rise, that would lead to consumers paying higher rates on their cards.

Here are the key findings:

Interest rates have stabilized.
Median advertised interest rates for purchases on bank-issued credit cards held steady at 12.99 to 20.99%. Likewise, bank cash advance and penalty interest rates remained unchanged from 2010 to 2011. During that same period, median credit union purchase rates slightly increased and cash advance rates declined.

Penalties cost less.
Since the enactment of the legislation, over-the-limit penalty fees have all but vanished. Only 11% of bank credit cards now include them, while the largest credit unions have eliminated them entirely. Pew’s research finds that late fees continue to be widespread. However, the cost of fees has gone down now that the law limits first-time late fees to $25 in most cases.

Annual fees have changed little.
Last year, roughly 14% of both bank and credit union cards carried annual fees; in 2011, that number held steady for credit union-issued cards and rose to 21% for bank-issued cards. The amount charged for annual fees held stable at a median of $59 for banks and $25 for credit unions. Forty percent of cards with annual fees included no-fee promotions for the first year.

"The Credit Card Act is an excellent example of how bipartisan legislation can be enacted that both protects consumers from potentially harmful practices while simultaneously creating a marketplace where banks and credit unions are able to compete based on clear and predictable pricing," said Eleni Constantine, director of the Financial Security Portfolio at the Pew Health Group. "Congress should take a similar approach to make other financial products, such as checking accounts and short-term, small-dollar loans, safer and more transparent."

The Pew Health Group is the health and consumer-product safety arm of The Pew Charitable Trusts, a nonprofit, public policy research organization.

Bonds May Not Be The “Safe” Investment You Think

2011-05-06T15:14:00.008-04:00

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

Many investors consider bonds the "safe" investment. But in considering a bond "safe" you may be failing to manage some very real risks that bond investing presents. These risks are why bonds, like equities, require ongoing oversight and active management.

For starters, there is a difference between a bond fund and a bond.

An individual bond is a promise to pay ongoing interest over the life of the bond and your principal at maturity.
You have three risks with an individual bond. The first is the risk of default. The second is the risk that you will need your principal prior to maturity and be forced to sell a bond at a loss. The third risk is that when your bond matures, you will be unable to replace it with another bond paying comparable interest.

The value of a bond over its lifetime is directly related to (1) the perceived risk of default and (2) current interest rates. If you purchase a bond during a period when 6% interest rates are the norm, and interest rates subsequently fall, your bond could be worth more than its face value. If interest rates were to go up, the value of your bond, if sold prior to maturity, would fall because an investor could purchase other bonds offering higher returns.

A bond fund is a collection of bonds with differing maturities and interest rates. The manager buys and sells bonds with the goal of increasing the value of the fund. The investor receives diversification across multiple bond issues, professional selection of bonds with an eye toward reducing the risk of default, and laddering of bonds of different maturities and returns typically with the goal of creating a stable flow of income (but no guarantee).

Unless the bond fund is a Unit Investment Trust (UIT,) it has no maturity and thus no obligation to return your principal. If a bond fund falls in value, there is no option of simply holding it until maturity to recapture your principal. The value of your investment in a bond fund will change in response market conditions and interest rates. On the other hand, you gain liquidity through the ability to sell virtually all bond funds at the current fund value (NAV).

The problem with bond funds, and with bonds you might want to sell before maturity, is the future direction of interest rates. The chart below shows the change in interest rates over the last 10 years. With every drop in rate, the value of a good bond increases if sold today. It's a good ride and one you want to stay on as long as it lasts.

The catch is that we don't know how long interest rates will remain at their current lows. The Federal Reserve has indicated that it sees no need for increases in the Fed Funds rate in the near future. The economy still struggles to recover and low rates are a good thing for the greatest debtor in our country - the U.S. Government. What we do know is that when rates begin to rise, they will affect the value of a bond portfolio. That's when risk management needs to be a part of the portfolio.

Feel free to email me with any questions or comments at Paul@investfortomorrow.com.

Until next time…

Paul Schatz

Heritage Capital LLC

http://www.InvestForTomorrow.com

http://RetirementPlanningConnecticut.com/

A Chinese Proverb on time and money

2011-05-02T19:15:00.000-04:00

Thought I'd share a Chinese proverb with you from my collection of favorites:

With money you can buy a clock, but not time.

Enjoy and please pass it on...

Angi

Treasurys up slightly after bin Laden's death

2011-05-02T19:06:00.000-04:00

NEW YORK (AP) — Treasury prices inched up Monday as investors weighed the news of Osama bin Laden’s death.

The price of the 10-year Treasury note rose 9.37 cents per $100 invested in late trading. Its yield, which moves in the opposite direction, fell to 3.28 percent from 3.29 percent late Friday.

Traders initially sold off government bonds after President Barack Obama said that bin Laden, the al-Qaida chief behind the Sept. 11, 2001 attacks, had been killed by U.S. forces in Pakistan. But investors eventually returned to the market on the belief that the threat of terrorism had not changed materially.

Traders also shrugged off a report that showed manufacturing activity grew for the 21st straight month in April.

In other trading, the price of the 30-year Treasury bond rose 31.2 cents per $100 invested, while its yield fell to 4.38 percent from 4.40 percent late Friday. The yield on the two-year note was unchanged at 0.61 percent.

In the market for short-term Treasury bills, the three-month T-bill paid a 0.03 percent yield. Its discount was 0.04 percent.

Commodities Review:

FALLING GRAINS: Corn prices fell 3 percent on expectations that planting will pick up this week in parts of the western Corn Belt because of drier weather. Wheat and soybeans also fell.

BIN LADEN IMPACT: With the exception of gold and oil, commodities not affected much by concerns about possible extremist retaliation after U.S. forces killed Osama bin Laden Sunday in Pakistan. Gold settled slightly higher while oil fell slightly.

DOLLAR’S EFFECT: Many commodities benefited from a weaker dollar. Since commodities are priced in dollars, a weaker dollar makes them more of a bargain for buyers using other currencies.

Stock Market Building Towards THE Peak

2011-04-28T23:00:00.001-04:00

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

As I write this Federal Reserve Chairman Ben Bernanke is just beginning his first ever, "official" press conference. As savvy as he is, (remember his first 60 Minutes interview right at the bear market low?) I doubt that we will hear anything unexpected in his remarks or his answers to media questions.

The latest bull run in stocks that began on March 16 remains alive and well. A few weeks ago, I offered that since we saw some of the key indices making new highs, that boded well for the others to play catch up. Since then, the Dow Industrials, Dow Transports and S&P 500 have scored fresh highs with the Nasdaq 100 a few cents away.

On the flip side, volume remains woefully pathetic and eventually that's going to matter. Sector leadership is very good, BUT the key financial sector is behaving very poorly. With the indices at new highs and this group in a downtrend, something has to give sooner than later.

So far, nothing has changed in my thinking that a possible significant peak is building sometime this quarter. Besides what I've already mentioned, I am focusing on the junk bond and small cap areas where the first sign of evaporating liquidity should be seen.

The initial decline from any major top is going to look exactly like every other small pullback, only in this case, the next rally will fail short of new highs and a sharp, relentless decline will ensue. As always, we will take it one step at a time and do our best to protect the gains we've been fortunate enough to make.

I hope that none of you are sitting back, complacently believing that we survived 2008 and all is good in the world. That we are on the cusp of another decade long bull market to untold riches. In case you haven't realized it, the stock market (and many, many, many mutual funds) is at the same level it was 12 years ago! That's essentially 0% return on your money BEFORE inflation! So factoring in that pesky inflation thingy, you end up with a significant loss.

I urge you! I beg you!! You have a plan in place in case you get into a car accident. You have a plan in place in case your house burns down. Don't sit back and hope that everything works out with your money. Now is not the time to procrastinate. It's the time to put a plan together. Investors don't plan to fail; they fail to plan!

Feel free to email me with any questions or comments at Paul@investfortomorrow.com.

Until next time…

Paul Schatz

Heritage Capital LLC
http://www.investfortomorrow.com/
http://RetirementPlanningConnecticut.com/

Follow us on Facebook at www.facebook.com/heritagecapital and on Twitter @Paul_Schatz

Alert! Alert! Alert! Bubble Warning

2011-04-22T08:00:00.001-04:00

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

One of the recurring themes of the past year has been about investment bubbles, how difficult they are to confirm and even tougher to profit from. We've talked about cotton and sugar and coffee and gold. And maybe next week, we'll do a review and see where they all stand.

Today, I want to share some very brief thoughts and pictures of silver and you some questions. Looking at the chart, from $26 to $43 an ounce in three months, what do you think? Bubble?

How about the chart below with a longer term view? From $18 to $43 in 8 months. Bubble?

And now, from the 2008 bottom. $9 to $43. What do you think?

Bubbles don't appear overnight. They require a confluence of fuel factors, a perfect storm if you will. First, they usually have a foundation from which they are built. That’s followed by a long-term bull market. Once there is widespread acceptance, we typically hear that “this time is different” when it comes to overvaluation.

The experts rationalize why conventional thinking no longer applies now and how we have some sort of new paradigm in the making. Just think back to the spring of 2008 with peak oil and how we should expect crude to remain forever high, right before it went from $147 to $35. Remember how they argued that since no one is creating any more land, housing prices would never really decline? And oh those dotcom stocks! I vividly recall being told it was no longer about earnings; it’s all about EYEBALLS!

When looking at commodities, as I have mentioned before, they behave the opposite of stocks. Commodities tend to make long, multi-year bottoms or foundations that scrape along, while their peaks are very violent, emotional affairs. Take a look at the monthly chart of crude oil below. That is about as classic and textbook a case of building a foundation, the bubble and the collapse.

Let’s turn back to silver. How does the chart below look for a long-term foundation? 1990 to 2002! That was followed by a “nice” bull market to the 2008 peak and subsequent collapse. Now, it’s truly become a bubble with a possible collapse looming.

Just because an instrument is exhibiting bubble type behavior doesn’t mean it must end right away or in total disaster, but the odds certainly are heavily in the disaster direction. Every now and then, we will see a security go vertical up the right hand side of the page and then enter a trading range where it generally goes sideways, but bounces from one price to another. That kind of digestion usually does not end in implosion.

The most difficult thing about bubbles is that they are incredibly challenging to pick the top. Investors often get burned several times being early. But once they roll over, there usually isn’t time to get onboard. Remember what John Maynard Keynes said? “The market can stay irrational longer than you can stay solvent.”

I’ll continue to keep an eye on silver and other instruments that exhibit bubble behavior. Just be careful if you trade or invest there!

FYI, I will be on CNBC’s The Call on Thurs., April 28 at 11:05 p.m.

Feel free to email me with any questions or comments at Paul@investfortomorrow.com.

Until next time…

Paul Schatz

Heritage Capital LLC

http://www.InvestForTomorrow.com

http://RetirementPlanningConnecticut.com/

Bull Market Long in the Tooth, but...

2011-04-15T08:00:00.002-04:00

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

Over the first three months of 2011, the S&P 500 gained 5.40%, certainly not too shabby. For the third time since the 17% correction ended in July 2010, we saw a healthy, needed and somewhat expected 4-8% pullback as you can see from the chart below. These digestive periods have followed very strong rallies that needed a pause to refresh, much like after eating an enormous meal. The brief bouts of weakness allowed the market to rest, re-gather itself and shakeout the weakest investors, which is necessary to begin a new leg higher.

At the risk of getting too technical, you can also see the dark blue line, which represents that average price of the last 50 days, orange line, which is 89 days and light blue line, which is 150 days. The November 2010 4-8% pullback kissed the dark blue line. The March 2011 4-8% pullback visited the orange line. The natural progression calls for the next significant decline, which could begin later this quarter, to come down and say hello to the light blue line, significantly below current levels but rising every day.

The bull market turned two in early March and continues to surf a tsunami of liquidity perpetuated by Ben Bernanke & Co. The Fed's quantitative easing part II of buying U.S. Treasury bonds did not change, but that is scheduled to conclude in June. Interestingly, the only real period where the Fed wasn't pumping a torrent of money into the system was last spring, which coincided with a 17% correction!

As I've mentioned before, there will be unintended consequences and benefits from all of the Fed's actions. A powerful bull market in stocks and bonds have made most people very happy, but far less are enjoying the reflation of commodities with energy prices soaring day after day, week after week and month after month.

The closer we get to what I see as a potentially bull market ending period, mid May to mid June, the more volatility should increase and more cracks should appear in the foundation of the markets. We are already seeing pathetic volume and some more significant technical damage to a few of the major indices.

I am keenly watching the performance of junk bonds and the small cap stocks for signs of liquidity leaving as well as sector leadership during rallies. I am concerned that two key sectors, banks and semiconductors, do not behave well, but I also don’t want to jump ship before it’s really necessary. Sometimes, the market will fool the masses and right itself on a dime and soar to new highs. That’s what makes certain periods much more difficult than others, especially those in aging bull markets.

Feel free to email me with any questions or comments at Paul@investfortomorrow.com.

Until next time…

Paul Schatz

Heritage Capital LLC

http://www.InvestForTomorrow.com

http://RetirementPlanningConnecticut.com/

Real Estate Season is Here

2011-04-07T22:00:00.002-04:00

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

Thank you for the flood of emails from last week’s piece, The Man Who Changed My Life. It was one of the more enjoyable posts I have done. Surprisingly, the majority of replies were from folks requesting more information about Sloo and what he said that was so bad I couldn’t sleep. They wanted to know how they could have me manage their money based on Sloo’s forecasts. The problem is that is the post was done on April 1, otherwise known as April Fool’s Day! Sloo Flipra spelled backwards…

Before I get into this week’s real content, I want to share something else. Having essentially lived in the greater New Haven area my whole life, except for college and five years on Wall Street, I have been so fortunate to have friendships from nursery school, some 40 years ago. I still have pictures from my three and four year old classes with Joanna Katz, Lauren Farber and Elisa Scholson, all friends to this day.

Lauren sent me an email last night about a bike ride she is doing. Sadly, she was diagnosed with a brain tumor and is now trying to raise money to help find a cure. If you are so inclined, please click on the link for me information on you can help the cause. Brain Tumor Ride.

And now, on to the topic at hand.

It’s that time of year again. The birds have flown back for the warmer months. Local golf courses have put the pins back in the greens. There are buds on the trees and bushes. Ski areas are closing and the Yankees have taken the field. It’s also the beginning of prime residential real estate season!

As I have done in previous real estate posts, I leaned on my good friend and real estate super agent Judy Cooper for advice. Similar to last season, it is clearly and unequivocally a buyer’s market. While the pace at which prices were dropping has diminished, prices remain weak and as I opined in two blogs last year, Real Estate I and Real Estate II, I think it’s going to be years and years for a real, sustainable recovery to take place.

We have less competition in lending and banks are much more stringent in putting their money to work. The employment numbers remain at very elevated levels and I do not believe the unemployment rate will get back to the “normal” zone until after the next recession. Finally, mortgage rates are at historically low levels. Best case scenario, they remain there, which would not help the refinance boom. Worst case, rates begin to rise and become an anchor on any real estate recovery for some time.

Nonetheless, each year, roughly one million new homes are needed to satisfy demand. When things were humming along in 2005, the U.S. had roughly a six month supply on the market. In the darkest days of 2009, that figure had ballooned to about 24 months. The last figures I saw still had the supply at more than 12 months.

Those of you, like me, who are in the market for a new house should feel okay, not rushed or pressured. We got lucky and sold our house last summer to a family who needed to close in a very short period of time. My wife and I made a deal that I would agree to find a larger house for our larger than expected family if she agreed to sell first and rent. That would give us a significant advantage coming buying time as we would have cash on hand with nothing to sell.

So here we are.

As I mentioned before, since my entire professional life revolves around making informed, non emotional decisions concerning money, I took a page from the business and created a quantitative model that values local real estate. Obviously, it can’t take into account intangible items like the immediate need to buy or the lack of a catalyst to sell. But overall, it’s usually within 5% of the transacted price.

Although the season is young, it’s unfortunate to report that sellers have come out from the long winter hibernation as though it was 2005 all over again. Some of the homes I have personally seen make me wonder if folks are caught in a time warp, overly medicated or living on Mars. As a previous seller, we clearly thought our house was worth more than it was. That’s the emotional attachment. But very quickly after we listed, Judy Cooper came back to us and advised reducing the price if we were serious about selling. So we listened and the rest is history.

Sellers like we have experienced are part of the problem, not the solution. The system remains full of inventory and desperately needs to be flushed before real stability can set in. With the recent housing numbers opening the door for a double dip housing decline, buyers need to be very careful letting emotion enter into the negotiations.

Two vital stats I strongly suggest using are the listing price divided by the either the town’s assessed value (usually 70% of appraisal) or listing price divided by the appraised value. Additionally, I would keep a close eye on the listing price divided by the square footage. Of course, the condition of the house can add or subtract from these figures, but at least they give you a general apples to apples comparison.

I asked cooperjudy@aol.com to offer advice for both buyers and sellers on the whole home buying/selling process.

Here you go…

For sellers:

1) Trust your Realtor! Choose someone who has experience, knowledge and has a 'complimentary' personality. If necessary, interview several to find the one who clicks best.

2) Let him/her explain how the price was arrived at....with lots of comparable homes, etc.

3) Stay unemotional!! The market sets the price a seller will receive. After 5-6 weeks, take a look again at your listing price...is it realistic? What feedback have you received? Revisit the price and see how many other houses have gone under deposit if yours hasn't.

4) Stage your house to make it looks its best.

5) Have a pre-listing inspection so you know what you're dealing with before the buyers tell you.

6) The first offer is usually the best...and if you don't accept it, you're essentially saying you would buy your own house back at that price. The question is: would you???

For Buyers:

1) Trust your Realtor: interview several to make sure they have experience, knowledge and a personality that clicks.

2) Learn the market. Go to open houses in the towns that interest you. Get a list from Town Hall of all houses sold in the past year for comparative purposes. Be especially interested in recent sales on streets you are looking at.

3) Prioritize your needs. Are hardwood floors more important that the location of a neighborhood? Learn the difference between cosmetic and structural changes when you see a house you like.

4) Get a pre-approval letter from a reputable lender BEFORE you start looking so you don't have unrealistic expectations.

5) The primary consideration in choosing a house is (yes!) LOCATION!! Neighborhoods trump main roads, level lots trump houses set down from the road or those on a steep driveway.

6) Do not negotiate with emotion--be willing to walk away.

7) Offer the seller non financial items of value: a closing date that suits their needs (if it doesn't impact yours), etc.

Feel free to email me with any questions or comments at Paul@investfortomorrow.com.

Until next time…

Paul Schatz

Heritage Capital LLC

http://www.InvestForTomorrow.com

http://RetirementPlanningConnecticut.com/

Save the Date: It's Financial Literacy Month

2011-04-07T18:30:00.004-04:00

NEW HAVEN - Higher One, a financial services company based at Science Park, is hosting "Tips and Tools for Becoming a Financially-literate College Student" at 6 p.m. April 13.

The event takes place at the main branch of the New Haven Free Public Library, 133 Elm St.

Admission is free.

3 Ways to Pay Your Federal Income Tax

2011-04-06T17:00:00.002-04:00

If you owe taxes but can’t pay the full amount by the April 18 deadline you should still file your return on time and pay as much as you can to avoid penalties and interest. You should also contact the Internal Revenue Service to ask about alternative payment options.

Here are three alternative payment options you may want to consider:

1. Additional Time to Pay.
Based on your circumstances, you may be granted a short additional time to pay your tax in full. A brief additional amount of time to pay can be requested through the Online Payment Agreement application at http:www.IRS.gov or by calling 800-829-1040. Taxpayers who request and are granted an additional 60 to 120 days to pay the tax in full generally will pay less in penalties and interest than if the debt were repaid through an installment agreement over a greater period of time.

2. Installment Agreement.
You can apply for an IRS installment agreement using the web-based Online Payment Agreement (OPA) application on IRS.gov. This application allows taxpayers who owe $25,000 or less in combined tax, penalties and interest to self-qualify, apply for, and receive immediate notification of approval.

You can also request an installment agreement before your current tax liabilities are actually assessed by using OPA. You may complete and submit a Form 9465, Installment Agreement Request, make your request in writing, or call 1-800-829-1040.

For balances over $25,000, you are required to complete a financial statement to determine the monthly payment amount for an installment plan.

3. Pay by Credit Card or Debit Card.
You can charge your taxes on your American Express, MasterCard, Visa or Discover credit cards. Additionally, you can pay by using your debit card. However, the debit card must be a Visa Debit Card, or a NYCE, Pulse or Star Debit Card.

To pay by credit card or debit card, contact one of the service providers at its telephone number or Web site listed below and follow the instructions. There is no IRS fee for credit or debit card payments, but the processing companies charge a convenience fee or flat fee. If you are paying by credit card, the service providers charge a convenience fee based on the amount you are paying. If you are paying by debit card, the service providers charge a flat fee of $3.89 to $3.95.

Do not add the convenience fee or flat fee to your tax payment.

The processing companies are:

Link2Gov Corporation:

888-PAY-1040 (888-729-1040)

www.pay1040.com

RBS WorldPay, Inc.
888-9PAY-TAX (888-972-9829)

www.payUSAtax.com

Official Payments Corporation

888-UPAY-TAX (888-872-9829)

www.officialpayments.com/fed

The Man Who Changed My Life

2011-04-01T09:00:00.003-04:00

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

For the past 23 years, I have been fortunate enough to make some truly outstanding market calls. Buying at bottoms, selling at tops. Forecasting major economic changes. Identifying bubbles right before they burst. It’s been one heck of a run. What I never shared before was that I had help, serious help. My whole life, I have always been a believer. When I found time to sit around and watch TV, I gravitated towards those infomercials and bought and bought and bought. From Ginsu knives to the juicers to abdominal machines to weigh loss without work, it’s all been through my house.

While travelling through Europe in 1987 as a student, I met a mysterious man named Sloo Flipra who changed my life. If you saw him, you would not have believed it. At first, it started out as casual conversation on a train about secret societies and how governments are just puppets for the real folks controlling the world. I was more than curious. I was captivated. He seemed to know everything and I mean EVERYTHING. He told me the hidden truth about world leaders being assassinated and the myriad of cover ups for things that were really going on militarily. He clued me on the manipulation in the financial markets and economy. He even offered that his sports predictions were more than 80% accurate. He discussed things that would only be credible in a Tom Clancy novel.

But it wasn’t just the past. He gave me a laundry list of forecasts and predictions for the coming years. I was hooked! We exchanged names and addresses and vowed to stay in touch. When I called my parents the next day and told them about the man I met, my mother asked me if I was taking drugs. My father thought a cult had snatched me up and I was brainwashed. “How much money did you give him?” my father demanded. “Nothing” I told him. “He didn’t ask for anything”.

After the exchange with my parents and getting back to my life, the bloom was off the rose and I didn’t pursue speaking with my new friend. That was until October 1989 when the stock market saw a mini crash after hostile, leveraged buyouts of United and American Airlines came crashing down. Panic hit Wall Street that this Blue Friday was going to lead to another Black Monday.

I received a note in the mail that said something like “#2 off the list”. During the summer of 1990 as the Dow was making new highs above 3000 for the first time ever, a note arrived that said “#4 off the list”. This time I paid attention and found the laundry list of predictions my friend from the train had made three years earlier. #5 was war in Iraq. When Saddam Hussein invaded Kuwait in the summer of 1990, I sent my friend a letter asking to meet. All I got in return was a note that said Dow 2400 this year. Two months later, the Dow saw its bear market bottom at 2350.

At the same time George Bush I’s approval rating was approaching 90%, yet another note arrived that said something like “Bush goes home a loser in ‘92”. This was beyond eerie. It was like having your own crystal ball. But I also became a little freaked out that this man could be in danger and I wouldn’t be far behind.

Although the curiosity was killing me, I stopped reaching out and after a few more notes, so did he. When I moved out of Manhattan in 1993 as the Yankees were decade long doormats, my friend’s final note at that time was filled with names of minor league players in the Yankees farm system, Jeter, Williams, Rivera. He said “rings, rings and more rings. The glory years are coming back shortly.” And he was right yet again as a dynasty was born.

One of the unfulfilled items on his huge list, which I am only mentioning the really big ones, predicted a decade long boom in the global financial markets, capped off by Dow 10,000. Not surprising, check out the chart below.

I don’t want you to think he mostly mentioned market related items. He gave me tons about politics and a few sports related items and entertainment and science, much of which I did not understand. He knew I was a golfer and told me a Cardinal would soon dominate golf like nothing since Nicklaus. Obviously, that became Tiger Woods.

Finally, after years and years of no contact, I sent my friend a letter in late 1999. Usually, I would hear back right away, but this time, there was no reply. Maybe he moved? Maybe he was ill? Maybe he passed away?

It took three months, but he finally did write back, wondering why I stopped communicating and why I was back. I think he was hurt. By this time, I had matured a lot (or at least I thought so) and figured this guy was my goose that laid the golden eggs. I had to capitalize on his gift.

I also wanted to dispense with the letter writing and either use the phone or email. When I asked about email, he told me to look at the original list from 1987 where it said electronic mail delivery will rule the world. Just incredible! We began to communicate fairly often via email. In early 2000, he told me to buy real estate for the run of a lifetime. He said that a multi-year bear market was about begin, led by the most horrific blow up in Internet stocks. Multi-year? Since I entered the business in 1988, the longest bear market had been measured in months. He was talking years.

During the election of 2000, when we did not know who our next leader was going to be, my friend emailed me and said “Bush I calls in favors for Bush II”. Another comment said, “Madoff a fraud”. At that time, I only knew Madoff as a legitimate securities market maker, nothing of the other business he was building.

The glaring miss my friend had was 9/11. It totally blindsided him and I think that caused him to retreat. In some way, I think he thought he was partially responsible for not being able to see it ahead of time and alert the authorities, which he had done for some of the previous threats against our country.

Over the next few years, he had little to forecast. He barely left his house and didn’t say much in our emails. When stocks bottomed in 2002, he said nothing. No warning about the Iraq war. No comments about housing or mortgages or leverage. He basically retreated into a shell and I figured he would never make a prediction again.

That was until late 2007 when I received an email that said “sell everything; don’t question; don’t ask questions; don’t contact me”. After almost 20 years of beyond belief predictions, I was in a total panic. My first reaction was nuclear war. What the heck does he see happening in 2008?

In early 2009, guess who emailed me? “Safe to go back in the water. 100% on the way”.

Just last week, my old friend emailed me again with an updated photo of himself. This time, it was a laundry list of market predictions, global events, natural disasters and the Final Four results. I have not slept since and I am really shaken up. What should I do?

The final item on his list simply said, “Check the date of this blog entry”. The world is such a serious place. I hope you enjoyed reading! I’ll be back next week with usual commentary. I think it’s time for some real estate comments as the spring season is upon us.

Go UCONN!

FYI, I will be on CNBC’s Squawk on the Street on April 5 at 9:35am.

Feel free to email me with any questions or comments at Paul@investfortomorrow.com.

Until next time…

Paul Schatz
Heritage Capital LLC

http://www.investfortomorrow.com/
http://RetirementPlanningConnecticut.com/

Follow us on Facebook at www.facebook.com/heritagecapital and on Twitter at Paul_Schatz

All Paths Lead Toward 13,000

2011-03-25T08:00:00.001-04:00

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

In Libya Like Egypt, I offered the following two scenarios for stocks.

Scenario A (in light blue on the chart below) - Stocks have a rough morning on Monday but the selling does not accelerate and the market begins to gather itself after the Fed meets on Tuesday. New 2011 highs are seen in April.

Scenario B (in light purple on the chart below) - Stocks open lower on Monday, accelerate during the day and close below the lows of last Friday, March 11. In that case, the 4-5% pullback ends up being 7-9% and we see a bottom by the end of March. From there, new 2011 highs are made later during the second quarter.

So now we know that scenario B is occurring with A already being eliminated as you can see in the chart below. So far, the market seems like it really likes the purple path as it sold off almost exactly to the bottom of the arrow and has now bounced smartly.

So, why am I not totally convinced? I don't like the fact that there have been so many up days that have seen all of the upside at the open and the market spent the rest of the day going sideways. That's not really strong conviction from key players. When I am bullish, I like when stocks open down or flat and spend the day rallying to their highs in the final hour of the day. But maybe I am being too hard on the market.

While I continue to believe that the stock market will see more new highs next quarter, (how could you not with the continued torrent of liquidity being pumped in by Bernanke & Co.) I do not have a strong opinion (as hard to believe as that is) that it's straight up from here. Rather, as you can see from the final chart below, I offer two possible paths with the same outcome.

If the green path appears to be favored by the markets, we should see lots of choppy moves in the coming week or so before breaking higher. In this case, we will likely stick with our current portfolios, which were increased to maximum equity exposure last week to go along with the maximum commodity holdings we’ve had all year. If the orange path takes hold, there may be some short-term trading opportunities. As always, we will take it one day at a time and see what the markets bring us.

FYI, I will be on CNBC’s Worldwide Exchange on March 30 from 5:35am to 5:55am.

Feel free to email me with any questions or comments at Paul@investfortomorrow.com.

Until next time…

Paul Schatz
Heritage Capital LLC
http://www.investfortomorrow.com/
http://RetirementPlanningConnecticut.com/

Follow us on Facebook at www.facebook.com/heritagecapital and on Twitter @Paul_Schatz

Conn. IRS tax assistance centers offer Saturday hours

2011-03-25T06:00:00.001-04:00

Taxpayers having difficulty visiting an Internal Revenue Service Taxpayer Assistance Center during weekday business hours can visit an IRS office on Saturday from 9 a.m. to 2 p.m. in New Haven at 150 Court St. or Hartford at 135 High St.

This will be the IRS' final Saturday Open House during the income tax filing season to provide free assistance to taxpayers who need help filing their tax returns. Help with account questions, such as collection or examination issues, is also available during the Open House.

“We are opening our doors on Saturday, March 26, to help taxpayers who may not have a chance to seek assistance during the work week,” said IRS spokesperson Gregg Semanick. “If taxpayers need help preparing their tax returns or have an account question, we encourage them to visit one of our open houses.”

The IRS offers assistance at 97 locations around the country. A complete list of places is available online at http://www.irs.gov/.

In addition to IRS help, community organizations partner with the IRS.

Volunteer Income Tax Assistance (VITA) programs assist people who earned $49,000 or less, and Tax Counseling for the Elderly (TCE) programs assist individuals age 60 and over with their 2010 income tax return preparation and electronic filing. Many of these sites have Saturday hours, while others offer assistance at various times during the week. Taxpayers can call 800-906-9887 to find local partners.

Stratford woman sentenced for misuse of veteran's benefits

2011-03-24T08:00:00.001-04:00

David B. Fein, U.S. Attorney for the District of Connecticut, announced that Ellen Pack, 64, of Broadbridge Road, Stratford, was sentenced by U.S. District Judge Janet C. Hall in Bridgeport to 2 months in prison, followed by 2 years of supervised release.

Pack was convicted of stealing U.S. Department of Veterans Affairs disability benefits while acting as a fiduciary for an incompetent military veteran. Hall also ordered her to spend the first 3 months of her term of supervised release in home confinement and to pay a $2,000 fine.

According to documents and statements made in court, Pack in 2006 and 2007 served as a fiduciary for a military veteran who was a patient at the Veterans Affairs Hospital in West Haven. As part of her fiduciary duties, Pack received funds from the Veterans Affairs department meant to be used solely for the veteran’s care and benefit.

Instead, Pack used significant portions of the monthly benefit payments, totaling more than $30,000, to pay for various items and expenses for her own use.

On July 27, 2010 Pack pleaded guilty to one count of misappropriating U.S. Department of Veterans Affairs disability benefits.

This matter was investigated by Special Agents of the Department of Veterans Affairs Office of Inspector General. The case was prosecuted by Asst. U.S. Attorney Douglas P. Morabito.

Japan... Buying or Selling Opportunity

2011-03-18T08:00:00.001-04:00

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

Last weekend, I was riding the chairlift my ski friend Don and he asked/stated that it seemed like a good time to short the Japanese stock market. My response was that I would rather look for the panic buying opportunity. I think that struck him as odd. Let me explain.

When major news, earnings, economic, geopolitical, etc. hits, there is typically an immediate reaction in the financial markets, and many times an overreaction. Think of the initial shock of the event. Apple blows out on earnings and the masses all want to get onboard. Unemployment comes in much worse than expected and everyone wants to sell. Lunatics fly planes into buildings. I think you get the picture.

Once the news is in the public domain, there is no longer an edge. All of the available news is factored into the market, at least for the time being until the situation takes a big turn. Intuitively, most investors react to news and investor with the news, i.e. selling into bad news and buying into good news.

After 23 years in the business, I don’t have all the answers and still have loads of question, but I have learned to buy when no one else wants to and sell when it seems idiotic to do so. Sometimes, I am early and other times I am spot on. But I live to invest with the minority. In more technical terms, it’s called mean reversion; buying into weakness and selling into strength.

So after my conversation with Don last weekend, let’s say you wanted to sell short the Japanese or even the U.S. stock market. We can use the exchange traded fund (ETF) that Ishares has on the MSCI Japan Index. It closed at 10.80 into the weekend as you can see from the chart below.

But it’s now Sunday and you would have had to sell short at Monday’s opening price, 9.86. At that point, the ETF was down 8.70% for the day and 15.21% since the peak. For me, that’s an awful lot of price to give up in order to put a trade on. Now, if the events in Japan ended right there, the ETF would have likely rallied, but if things got out of control, the ETF would likely head much lower.

As you can see from the chart below, Japan did head lower right at the open Tuesday morning to 9.32, but closed the session above 10. And as I write this Thursday evening, it closed the day at 10.10.

It’s still too early to know the final outcome, but from my seat, I would rather look for signs of panic selling to buy in to than try to hop on board a moving train that’s long left the station.

I vividly remember the events after 9-11, waiting for the markets to reopen. When they finally did and I was looking to buy, that first down day of roughly 500 points saw very little panic. It was probably the most orderly 500 collapse in history! I went home that night with a bad feeling that serious pent up selling was coming. And although I was looking to commit cash and buy, I was still sitting on investments that would certainly get hit in the coming days.

In that case, it took about five trading days for true panic to set in, coincidentally as I was on my second bachelor party trip in two weeks. Waking up in Wisconsin to find the early indication of the Dow down another 500-700 points was definitely unsettling! But it also smacked of real despair and investor capitulation. You could have shorted our market any time during those first five days and you would have been ok for a few days. But once the market turned, stocks launched higher more than 20% in just a few short months. Again, I would rather digest the news, wait for my spot and go against the crowd.

FYI, I will be on CNBC’s The Call on March 24 at 11:05am.

Feel free to email me with any questions or comments at Paul@investfortomorrow.com.

Until next time…

Paul Schatz
Heritage Capital LLC
http://www.investfortomorrow.com/
http://RetirementPlanningConnecticut.com/

Follow us on Facebook at www.facebook.com/heritagecapital and on Twitter @Paul_Schatz

Donating to Japan relief efforts? Screen carefully

2011-03-17T20:00:00.000-04:00

In the wake of the massive earthquake and tsunami that devastated northern Japan, people around the world and in Connecticut are opening up their hearts and wallets to help those who survived the devastation.

The Connecticut Department of Consumer Protection is urging residents around the state to diligently and carefully check out charities before making a monetary donation toward relief efforts.

“The devastation is overwhelming and the losses, both personal and economic, move us to donate quickly and generously,” Consumer Protection Commissioner William M. Rubenstein said. “But because scam artists are adept at exploiting disaster for personal gain, I urge you donate carefully, so that your kindness and generosity are not exploited.”

Rubenstein suggested taking the following steps:

Donate to well-known, established charities.
This is the best way to ensure that your donation is used appropriately. Establishing an effective, efficient new charity following a crisis is nearly impossible. Find a charity with a proven track record in providing disaster relief on a massive scale, one that has worked in Japan and other affected regions.
One source for checking out the details about a charity that you are considering is http://www.charitynavigator.org/.

Specify that your donation is for this crisis in Japan.
Do not send supplies unless a charity specifically requests them. Otherwise, there may be no system to receive, organize and distribute your donation.
Avoid responding to e-mail and telephone solicitations on behalf of supposed victims.
Unless you personally know someone in Japan, anyone contacting you in this way is most likely part of a scam.

Delete unsolicited e-mails and don’t open attachments.
Never respond to unsolicited emails and don’t open any attachments to these emails even if they claim to contain pictures from Japan. The attachments may be viruses designed to steal personal financial information from your computer.

Beware of copycat organizations.
Criminals are likely to set up bogus sites to steal the identities and donations of generous, unsuspecting individuals. When giving online, be sure to find the charity’s legitimate website. Again, you can access links to each bona fide charity’s sites from the Charity Navigator site referenced above.

Remember: social media sites also require caution and scrutiny – Twitter, Facebook, YouTube and blogs about the disaster include emotional pleas for donations. Do not blindly give via these vehicles. As with any charity, investigate the groups behind such pleas to ensure that they come from a legitimate organization.

“The outpouring of concern and support for those affected by this tragedy is enormous, but unfortunately, so is the potential for fraud,” Rubenstein said. “We all must take precautions to ensure that the generosity of Connecticut residents is not abused."

Suspicious solicitations can be reported to your local police department and to the state Department of Consumer Protection at 1-800-842-2649.

"Anyone caught engaging in fraudulent activity will be prosecuted to the fullest extent of the law,” Rubenstein said.

Financial Empowerment: Hip-Hop mogul Russell Simmons raps on serving the unbanked

2011-03-15T21:00:00.002-04:00

Philanthropist and author Russell Simmons built the Phat Farm fashion empire into a revenue generator that topped $300 million and he managed rap stars before hip-hop was a lucrative genre within the music industry. Yet, he saw what he describes as a "white space" that no one was cultivating, while others saw these artists as risky. (Photo credit to Gerald Janssen)

Simmons took the leap and formed Def Jam Records in the 1980s, bringing into the mainstream hip-hop greats such as The Beastie Boys, Whodini, Public Enemy, LL Cool J, Ludacris, DMX, Jay-Z and his brother, Joseph Simmons or "Run" from the group Run DMC.

He spoke with me briefly Tuesday, during a stop along his bus tour in New Haven. Simmons visited with more than 800 students at James Hillhouse High School, followed by a reception and book signing at The Rodrick Gilchrist Fashion House in the Westville neighborhood.

In his latest book "Super Rich: A Guide to Having It All," Simmons we don't need money or toys to be happy.

"So rather than any state of material abundance, Super Rich actually refers to living in a state of consciousness where you're able to see the miracles of life unfolding in front of you all the time," the 'godfather of hip-hop' says. "That's right, when you're Super Rich you'll be able to see that happiness is actually a state of needing nothing."

Listen below as he expounds on how entrepreneurship has enabled him to both fill a societal need and satisfy personal passions "There's always something missing," he says, among other things:

One of Simmons' latest endeavors is UniRush Financial Services, a company that provides pre-paid debit cards, money transfer services and helps consumers with building credit histories, as well as creating and managing personal budgets.

Just as he previously noticed voids in the music and fashion industries and established businesses to address them, Simmons felt compassion for the unbanked and developed online services to help them achieve financial literacy, while providing tools that enable them to better manage their finances.

Listen to him talk about how that evolved here:

No Surprise: High Debt = Low Savings

2011-03-15T19:30:00.001-04:00

It does not surprise me that America Saves and Experian® found in a recent survey that individuals with credit card, payday loan, and other high-cost consumer debt are more likely to have difficulty saving.

“High cost consumer debt can be a financial nightmare. Regular contributions to a saving account can help consumers avoid the need for this type of credit,” Nancy Register, America Save's national director, said in a statement.

The results showed that these consumers are more likely to use credit to pay an unexpected expenditure, than those without this debt. The survey also revealed that 16 percent of Americans have very expensive payday, car title, or pawnshop loans.

Maxine Sweet, Experian's vice president of consumer education, said cleaning up and paying off debts can have a positive impact on credit scores. When consumers can save, unexpected life events won't send them spiraling into a crisis, she said.

Over half of those surveyed who receive a paycheck (55%) reported having difficulty saving a portion of each paycheck. The percentage of moderate-income households ($25,000-50,000 annual incomes) receiving a paycheck who reported this difficulty (69%) was exceptionally high.

About two-thirds of those with credit card debt (66%), but less than half of those without this debt (47%), reported difficulty saving a portion of their paycheck.

America Saves and Experian plan to raise awareness about and encourage positive saving habits by using educational materials promoted through the America Saves national network.

Individuals and families will also be encouraged to save automatically through regular transfers from paychecks or checking into savings, officials said.

Bubbles & Collapses Make The World Go Around

2011-03-11T09:45:00.001-05:00

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

Over the past few months, I have written about securities that were very extended on the upside as well as the downside, bubbles versus collapses. Before I get into a new security, which is actually an old one discussed last year, let's take a quick peak and see where they stand today.

The series began with Gold Nearing A Rally, where I showed examples of how gold behaves during a bull market with strong rallies followed by long trading ranges and more upside. We left off with the chart below that offered a likely path.

And today, you can see below that gold behaved as it was supposed to, by rallying smartly to the old and now new highs. As I tweeted and posted on Facebook, I do not believe now is the time to throw caution to the wind and buy gold. The “easy” was made off that low. This textbook behavior is good to see, but far from guaranteed each time. Every once in a while, the market will throw your forecast for a loop, just to keep you honest.

The gold post was followed up by one on Treasury bonds, So Bad, They Are Actually Good, where I opined that there were so few bulls left, and T bonds had been pounded so hard, it was actually bullish. Below you can see the chart at that time.

Today, as you can see below, bonds rallied nicely and have recently pulled back to a point where risk can be identified and contained by the 2011 low. Until proven otherwise, the path should take them higher into next quarter.

On the flip side, cotton has been in bubble land for a while as I wrote about in HUGE Bubble In The Making.

Once again, cotton MAY be peaking, but after being burned so many times, who is going to stick their neck out and become overtly bearish? That's the exact making of a bubble and why so few people actually profit from the first and most severe leg down.

I am going to finish this piece with the U.S. dollar, which I wrote about late last year. As you can see from the chart below, when the masses were uniformly bullish at 90%+, the dollar fell hard. Who was left to buy? Conversely, with less than 10% bulls, the buck rallied with few left to sell.

Today, the dollar is back to being the second most unloved investment after Treasury bonds with less than 10% bulls for the second time this year. It's hard to find many folks who believe it has any chance of rallying over any timeframe. As usual, I am taking the other side, having turned long-term bullish in early 2008 and continue to believe the greenback is in the early stages of a major, multi-year bull market. Of course, I will temper that view when rallies become overloved and unsustainable.

As I finish typing this, the stock market remains under pressure on geopolitical concerns from the Middle East. I do not believe this is going to be a large decline and should wrap up this month. The market has come very far in short order and it is overdue for the pause to refresh.

On a technical basis, as you can see from the chart below, the S&P 500 has been a pattern called a triangle, which is essentially a compression of volatility. This usually leads to volatility expansion, which is what we are seeing right now. Once the bottom of the triangle is exceeded and a rush of fear hits the market, I would expect the bulls to begin to fight back and rally to ensue.

FYI, I will be on CNBC’s Squawk on the Street on March 15 at 9:35 a.m.

Feel free to email me with any questions or comments at Paul@investfortomorrow.com.

Until next time…

Paul Schatz
Heritage Capital LLC
http://www.investfortomorrow.com/
http://RetirementPlanningConnecticut.com/

Follow us on Facebook at www.facebook.com/heritagecapital and on Twitter at Paul_Schatz

4 ways to find free tax help

2011-03-10T22:05:00.002-05:00

The Internal Revenue Service offers free assistance by computer, telephone and in person. The IRS can also help find free tax preparation sites for those who qualify. Here are four ways you can get the information you need to file your tax return.

1. The IRS website is a one-stop shop for a wide array of tax information.
You can even prepare and file your federal tax return through Free File, a service offered by IRS and its partners who make available free tax preparation software and free electronic filing. But you must go through IRS.gov to use Free File.

2. Taxpayer Assistance Centers.
When you believe your tax issue cannot be handled online or by phone and you want face-to-face assistance, you can find help at a local IRS Taxpayer Assistance Center. Locations, business hours and an overview of services are available at IRS.gov. Just go to the Individuals tab and click on the link for Contact My Local Office in the left tool bar section under IRS Resources.

3. Community Resources.
Free tax preparation is available through the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly programs in many communities. Volunteer return preparation programs provided through IRS and its partners offer free help in preparing simple tax returns for low-to-moderate-income taxpayers.

For a list of the 2011 VITA sites you can visit IRS.gov, or call 800-906-9887. You may also call AARP — the largest TCE participant — at 888-227-7669 (888-AARPNOW) or access http://www.aarp.org/ to find the nearest AARP Tax-Aide site.

4. Telephone.
Call the IRS Tax Help Line for Individuals, 800-829-1040, to get answers to your federal tax questions. To hear pre-recorded messages covering various tax topics or check on the status of your refund, call 800-829-4477. TTY/TDD users may call 800-829-4059 to ask tax questions or to order forms and publications. To order free forms, instructions and publications call 800-829-3676.

Financial workshop coming for college-bound upperclassmen

2011-03-10T21:48:00.000-05:00

NEW HAVEN - Higher One invites college-bound high school juniors and seniors in New Haven and their parents are invited to a workshop on Wed., April 13 from 6-7 pm, at the main branch of the New Haven Public Library, 133 Elm St.

Mary K. Johnson, financial literacy and consumer advocacy manager at Higher One, will present “Becoming a Financially Literate College Student.” She will also announce a new scholarship opportunity available only to New Haven high school seniors who attend the workshop.

This workshop will offer students tips on avoiding the traps of overspending and credit card debt that can have painful consequences both during college and after graduation. Attendees will learn how to stay financially afloat with good money habits, including choosing and managing a bank account and creating a budget they can live with.

Parents will gain insight into the financial issues that college students must cope with for successful outcomes.

Those who attend this training will be eligible for Higher One’s $500 New Haven Community Book Scholarship. Guidelines and application forms will be available at the event.

With operations in New Haven and Oakland, Calif., Higher One provides a full array of financial services including refunds, payments and electronic billing to almost 700 institutions of higher education. The company also provides nearly 5 million students nationwide with a smart new way to manage their student loans and college expenses. Find out more at www.higherone.com.

Advance registration is required for the free workshop. Sign up online at www.higherone.eventbrite.com or by calling the library at 203-946-8835.

Huge bubble in the making

2011-03-04T08:12:00.001-05:00

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

A few weeks ago, I went into detail on how depressed the Treasury bond market was and how it was almost impossible to find any bulls in So Bad They Are Actually Good . That led me to the contrarian conclusion that treasuries were likely close to at least a short-term, if not longer-term, bottom.

This week, I am going to go to the opposite end of the spectrum and talk about bubbles. In my Shockers 2011 issue, I spoke about cotton, sugar and coffee being in speculative bubbles that would end very poorly. Let's go into the charts for a peak in cotton. I'll come back to sugar and coffee next week.

The key thing to remember about bubbles is that they always last longer than anyone believes. Declines that appear to be the bubble bursting tend to end and another, even more parabolic, move begins until finally the whole thing comes crashing down. Positioning to profit on the collapse is very difficult since, as we've all learned and heard from John Maynard Keynes, "the market can stay irrational longer than you can stay solvent".

Cotton is a VERY volatile commodity that's known for dramatic, often straight up rises and gravity defying declines. The chart below doesn't even begin to describe the craziness until you pay close attention to the scaling on the right. 30 to 90 and back and back. Try living through that!

Now, multiple moves from 30 to 90 can certainly be classified as bubblesque. But what happened next is unbelievable! From the crash low in 2008 at the far left of the weekly chart, check out where cotton is today. 200!!!

Zeroing in a little more, you can see a daily chart below.

I vividly recall thinking that cotton was heading for a grand collapse from the 150 level in November. All the signs were there!

But someone forgot to tell the commodity!

So once again, cotton has all the signs of a bubble bursting. And in hindsight, it will be clear as day. But how many times can the bears afford to be wrong and totally blown out of the water? That's exactly why bubbles are so easy to spot but so hard to profit from on the way down. They never make it easy!

I stand by my shocker that the bull market in cotton will end very poorly this year, whether the collapse is starting right here and now or later during the first half of 2011.

FYI, I will be on CNBC’s The Call on March 9 at 11:05am

Feel free to email me with any questions or comments at Paul@investfortomorrow.com.

Until next time…

Paul Schatz

Heritage Capital LLC

http://www.InvestForTomorrow.com
http://RetirementPlanningConnecticut.com/

Follow us on Facebook at www.facebook.com/heritagecapital and on Twitter at Paul_Schatz

Libya… Like Egypt?

2011-02-25T08:42:00.001-05:00

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

For many, many weeks, I have discussed the stock market's need for a pullback. A short-term cleansing to refresh the rally. Unfortunately, far too many others have been talking about it as well, so the market decided not to accommodate, until it wanted to.

Several weeks ago, I offered that the pullback so many were looking for would probably come out of nowhere with some geopolitical event and would quickly lop 4-7% off the major indices. Tuesday was just that day, following more unrest in the Middle East. This time it was Libya with its big supply of oil. Since I have been writing about this pullback since late last year, I certainly deserve zero in the way of credit for it finally happening. I mean, even a broken clock is right twice a day! Call for something long enough and it's bound to happen at some point.

As I've mentioned before, it's still incredible that the Dow has not closed below its 20 day moving average (average price of the last 20 days) since 12/1 as you can see below. That's historic momentum! I am going to go out on a limb and say that the market will not respond the same way as it did with Egypt and this time it will close below the 20 day moving average in the coming week or so.

But at the same time, I also do not believe this is the start of a real correction (10%+ downside). Corrections typically do not start with a bang like we saw on Tuesday, just one day removed from the high. Instead, more significant declines usually start slow and small, building towards the large down days, like snowball rolling downhill and gathering momentum. When is a snowball and market going the fastest downhill? The second before it hits the bottom. In this case, we could (and should) see some more downside, but I don't think it's anything serious, yet.

I'll be watching for signs of sector rotation among leadership, both positive and negative, along with any indication that the emerging markets are ready to percolate again. As the major US indices have steadily marched higher since December, which you see from the above chart, emerging markets, chart below, weighted towards the big countries like China, India and Brazil, have totally lost their leadership role and unable to make upside headway.

Equally as important, the performance of the high yield (junk) bond market must be closely watched after the single most dramatic bull market run in history. For the most part, as long as the high yield market is confirming the rally and outperforming on the downside, the structural bull markets in stocks should continue, for now.

Feel free to email me with any questions or comments at Paul@investfortomorrow.com.

Until next time…

Paul Schatz

Heritage Capital LLC
http://www.investfortomorrow.com/
http://RetirementPlanningConnecticut.com/

Follow us on Facebook at www.facebook.com/heritagecapital and on Twitter at Paul_Schatz

3 tips to beat sticker shock at the grocery store

2011-02-21T11:59:00.001-05:00

Earlier this month the United Nations announced that food prices hit a record high globally and prices are expected to continue to climb to new heights, increasing by 3 percent or more over the remainder of 2011.

And the U.S. Department of Labor's January Consumer Price Index showed food prices rose 2.1% over the past year.

Jeanette Pavini, household savings expert for Coupons.com , offers these three strategies to combat sticker shock when you're out at the grocery store:

Incorporate coupons.

Coupons are almost always available on household basic necessities and these items rotate on sale at most grocery stores. Plan ahead and use coupons on sale items at the grocery store to deepen your savings.

Compare unit prices of package sizes.
One trick manufacturers are using to fight the rising cost of food is adjusting package sizes. Make sure you’re getting what you pay for – the package may look similar to what you used to buy, but the actual volume might not be the same.

Load up on “loss leaders.”
Paying attention to prices and sale ads will help you determine the best deals and steals as you maneuver through grocery aisles.

So Bad, They Are Actually Good

2011-02-16T21:00:00.001-05:00

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

I haven't written an article about the Treasury bond market in a while, probably because it's been in a very strong downtrend without overwhelming negative sentiment to help turn the tide. That's all changing now.

Since the summer, Treasury bond prices have imploded 14%, and yields have exploded higher by roughly 38%. (Remember, in the bond market, price and yields go in opposite directions) Those are historically enormous moves in such a short period of time, especially since the Fed is supposed to be buying up all those bonds in hopes of keeping interest rates low to help the still crippled housing market

Just like with stocks, commodities and real estate, it's amazing how many people are positive near peaks and negative near bottoms. Market sentiment is usually polarized. So if 100% is the absolute highest number of bulls and 0% is the lowest number of bulls, you can certainly become very interested at extremes above 90% and below 10%.

Would you personally rather buy when almost everyone is bullish or no one is bullish?

Long time readers already know that I am very contrarian in my thinking. Of our nine investment strategies, the majority seek to buy weakness and sell strength, more commonly known in the industry as mean reversion.

Usually, when we are buying into some type of decline, the number of investors with a positive outlook on the investment falls substantially, hence the selling and someone to sell to us. And when we attempt to sell into strength, there are hopefully a vast majority of investors positive, hence all the buying to drive the security up and someone to buy from us. If it was only so easy!

Below is a weekly chart of the 30 year treasury bond. You can see the two times over the past two years when the number of bulls was at least 95%. While it didn't exactly pinpoint THE high, it was fairly close and the turnaround wasn't too far off. It takes a substantial rally to turn that many investors bullish and get their money invested. So who is left to buy?

You can see in both cases, treasury bonds fell very hard soon thereafter. During the second half of 2009 and early 2010, bonds stayed in a wide trading range that was supported three times by less than 10% of investors positive. Finally, a spark ignited the rally to suck in all that money and register 95%+ bulls at the right.

The chart below has been dialed down to a daily time frame and you can see the preponderance of bulls on the far left and subsequent (and current) powerful downtrend that brings us to today. Just earlier this week, the number of investors (actually futures traders) sank to under 10%. This does not mean that bonds must immediately rally. As we saw above, it can be the beginning of a trading range. But history does show that the downside should be limited and the risk/reward now favors the upside.

As I said on CNBC's The Call this past week, treasury bonds are the most unloved investment right now and something that deserves consideration for at least a trade. Maybe this is a major bottom or it's still out there after a rally. It's too early to say. Wouldn't it be interesting if treasury bonds saw a significant low just as Bernanke & Co. ended their purchases?

Feel free to email me with any questions or comments at Paul@investfortomorrow.com.

Until next time…

Paul Schatz

Heritage Capital LLC
http://www.investfortomorrow.com/
http://RetirementPlanningConnecticut.com/
Follow us on Facebook at www.facebook.com/heritagecapital and on Twitter @Paul_Schatz

Impending Debt Crisis Needs to be Addressed

2011-02-10T20:57:00.001-05:00

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

With my Fearless Forecast and Top 15 Shockers for 2011 already done, we will be heading back to some more “normal” topics. Those two pieces are two of the more enjoyable contributions I do each year, although they are more for fun than education.

This past week, Yahoo! invited me to the NASDAQ Market Site in Times Square to record an interview based on my shockers list. We ended up speaking for almost 30 minutes and they divided the interview into three segments that were posted on Yahoo! Finance. If you want to watch them, here they are:

Look Out Emerging Markets Investors!

2011 Political Shockers

NOT Your Normal Economic Recovery

One of the country’s themes in 2011 is the impending debt crisis. It’s one of the few things both democrats and republicans can publicly agree on! It used to be a question of “if”, but sadly, it’s now a question of “when”. America has been a global political, economic and military power for about 100 years. If this issue is not dealt with seriousness and a sense of urgency, the U.S. will end up being like previous world powers, wounded and no longer able to dominate.

I have heard comparisons to the Roman Empire, but frankly, I am not smart enough for that analysis. The one that does resonate with me is England or Great Britain or the United Kingdom, whichever way you want to discuss that region. During the 1900s, she enjoyed some of the same power status that America has today. But once she fell from grace, her economy never was able to get back to a leadership role. Sure, that economy can grow, but like some other European countries, it’s been sub par growth from being weighed down by fiscal issues.

Anyway, I am sure there are millions of academics that can explain this better me, but I think you get the gist. I came across an interesting example of how much cutting $100 million from the federal budget actually means. The video pokes fun at President Obama, which in this case, is not my intent. It could have easily targeted almost anyone in government the past 10 years and certainly former President George Bush.

Budget Cuts

It does underscore how serious and almost dire our situation is at the current pace. $100mm is almost nothing. Sad but true. The U.S. has reached the point of only painful outcomes. Trying to grow our way out of the fiscal crisis won't cut it anymore.

And as Bernanke has said many, many times, we have to be very careful not to cut too hard initially and bury the nascent recovery. In reality, the government must agree on a plan to cut a MINIMUM of $100 billion a year for the next 10 years, with increasing amounts as the years go on.

And before you assume I am going to slam Obama for this, think again. While his deficit reduction plans have been seriously underwhelming, all I hear is rhetoric from the other side. Although I am a fan of Congressmen Eric Cantor and Paul Ryan, I have yet to hear any substantive and specific cuts their side would endorse.

I think both parties should cease with the nonsense and garbage and offer the American people details. It's laughably pathetic that the vast majority of politicians want to protect social security, Medicare and defense. It's not going to happen! Throw in the amount we pay to service the national debt and there's really not much left to cut.

If you recall the movie A Few Good Men, at the end, when Tom Cruise is questioning Jack Nicholson on the stand. Cruise yells, "I want the truth!", to which Jack replies, "You can't handle the truth". That's where I think we are with Washington. Americans deserve the truth. We have earned it!

Feel free to email me with any questions or comments at Paul@investfortomorrow.com.

Until next time…

Paul Schatz
Heritage Capital LLC
http://www.investfortomorrow.com/
http://RetirementPlanningConnecticut.com/

Follow us on Facebook at www.facebook.com/heritagecapital and on Twitter at Paul_Schatz

Tuesday Tax Tip: 10 tax benefits for parents

2011-02-08T21:57:00.001-05:00

Did you know that your children may help you qualify for some tax benefits?

Here are 10 tax benefits parents should consider when filing their tax returns this year:

1. Dependents.
In most cases, a child can be claimed as a dependent in the year they were born. For more information see IRS Publication 501, "Exemptions, Standard Deduction, and Filing Information."

2. Child Tax Credit.
You may be able to take this credit on your tax return for each of your children under age 17. If you do not benefit from the full amount of the Child Tax Credit, you may be eligible for the Additional Child Tax Credit. For more information see IRS Publication 972, Child Tax Credit.

3. Child and Dependent Care Credit.
You may be able to claim the credit if you pay someone to care for your child under age 13 so that you can work or look for work. For more information see IRS Publication 503, Child and Dependent Care Expenses.

4. Earned Income Tax Credit.
The EITC is a benefit for certain people who work and have earned income from wages, self-employment or farming. EITC reduces the amount of tax you owe and may also give you a refund. For more information see IRS Publication 596, Earned Income Credit.

5. Adoption Credit.
You may be able to take a tax credit for qualifying expenses paid to adopt an eligible child. Taxpayers claiming the adoption credit must file a paper tax return because adoption-related documentation must be included. For more information see the instructions for IRS Form 8839, Qualified Adoption Expenses.

6. Children with Earned Income.
If your child has income earned from working they may be required to file a tax return. For more information see IRS Publication 501.

7. Children with Investment Income.
Under certain circumstances a child’s investment income may be taxed at the parent’s tax rate. For more information see IRS Publication 929, Tax Rules for Children and Dependents.

8. Higher Education Credits.
Education tax credits can help offset the costs of education. The American Opportunity and the Lifetime Learning Credit are education credits that reduce your federal income tax dollar-for-dollar, unlike a deduction, which reduces your taxable income. For more information see IRS Publication 970, Tax Benefits for Education.

9. Student Loan Interest.
You may be able to deduct interest you pay on a qualified student loan. The deduction is claimed as an adjustment to income so you do not need to itemize your deductions. For more information see IRS Publication 970.

10. Self-employed Health Insurance Deduction.
If you were self-employed and paid for health insurance, you may be able to deduct any premiums you paid for coverage after March 29, 2010, for any child of yours who was under age 27 at the end of 2010, even if the child was not your dependent.

The forms and publications on these topics can be found at the IRS Web site or by calling 800-TAX-FORM (800-829-3676).

Top 15 Shockers For 2011

2011-02-04T09:13:00.000-05:00

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

Each year, I usually release a small list of somewhat off the wall things that I think have some chance of occurring. Some shockers are repeats. Obviously, I hope that all of the less than positive ones don't happen. This is not my forecast for 2011, which I hope has a better chance of coming true!

Before I get to this year’s list, let’s do a quick review of what I offered last year. You’ll see my comments on how each did in italics.

Last Year’s 2010 Shockers:

1 - At least one major European country defaults on its debt
With so many crises that the ECB had to fight, I’ll put this in the correct column.

2 - The Euro sees a country leave, causing further strains in the union
Very close with Greece!

3 - A municipal bond crisis unfolds in the US
No crisis, but that sector was certainly pounded during the final four months of the year.

4 - Heading into its third decade of deflation and economic ruin, the graying and flat population of Japan begins to open its borders to immigration and remilitarizes, hoping to shock and stimulate their economy
Not yet.

5 - Aided by a resurgent economy, the Democrats retain both houses and Congress and super majority in the Senate
Not even close!

6 - Tim Geithner resigns from the Treasury citing personal reasons to spend more time with his family and embark on a career in the private sector, payback to him for having helped Wall Street "swindle" hundreds of billions from taxpayers
Too bad it didn’t happen.

7 - Treasury bonds end the year as one of the top performing assets
They were sailing ahead up more than 25% during the summer before giving back more than half the gains.

8 - Citibank is broken up and sold off in pieces and loses its name
Not until Uncle Sam goes totally away.

9 - Goldman Sachs goes private since the benefit of being public, added capital and huge leverage is no longer there
Nope.

10 - Citizens of Iran rise up against their government and begin a revolution. Iran responds by attacking Israel in an ill-conceived attempt at rallying public support behind a collapsing government.
Thankfully no.

11 - The stock market peaks during the third quarter and a new bear market begins.
The stock market saw a significant peak in April, followed by a 15%+ correction, but it was just in the context of an ongoing bull market.

12 – The Jets win the Super Bowl. Hey, I can dream! (actually, it’s San Diego)
Will my Jets ever get back to the party?

So now, let’s roll out the Shockers for 2011!

1 – After toiling in obscurity for more than two years while its energy cousins doubled and tripled, natural gas finally has its day in the sun as one the surprise investments of 2011, almost doubling!

2 – The Euro currency’s quiet bear market reinvigorates itself and heads to new five year lows and towards the ultimate shocker of parity (100).

3 – Under tremendous pressure from both within and the financial markets, Bernanke & Co. do not launch QE3 when it ends in June. Initially cheered by all, this leads to major asset peaks in stocks, commodities and high yield bonds.

4 – Joe Biden suddenly resigns the vice presidency and is replaced by Hillary Clinton, virtually assuring Barack Obama of reelection in 2012.

5 – Riding a renewed wave of cooperation with John Boehner and Congress, Barack Obama’s popularity soars to heights forcing quality republican candidates to withdraw.

6 – Powerhouse countries China and India lead the emerging sector to strongly choke off inflation by raising interest rates and draining liquidity. In turn, the bull market in emerging markets comes to a grinding halt.

7 – Generation bubbles in cotton, sugar and coffee burst, sending these highflying commodities in a tailspin.

8 – Driven by the wildest global weather on record, wheat, corn and soybeans soar to record highs, eclipsing the bubble prices of 2008.

9 – Contrary to widespread, depression like prognostications from Meredith Whitney, the municipal bond market does not collapse in crisis.

10 – The public’s love affair with investment grade and high yield corporate bonds ends.

11 – After two years and almost 100% rally, the public finally plows back into stocks, just like they did with tech in 1999, housing in 2006 and energy in 2008, precisely at the wrong time, leading to yet another case of getting caught holding the bag.

12 – While the economy chugs along during the first half of the year and the unemployment rate slowly declines, the trend sharply reverses during the second half as GDP slows and the ranks of the unemployed rises.

13 – The security no one wants to own, long-term U.S. treasury bonds, sees a dramatic resurgence during the second half of 2011.

14 – Investors infatuation with Apple and Netflix turns to sobs, tears and saturation as the outperformance grinds to a halt and turns rotten to the core as it’s streamed through our living room.

15 – The once storied New York Mets are the doormat of the National League East, unable to win even 70 games as the Red Sox and Phillies dominate Major League baseball.

A little longer than planned, but I hope you enjoy it anyway!

FYI, I will be on CNBC's The Call on February 8 at 9:35am.

Feel free to email me with any questions or comments at Paul@investfortomorrow.com.

Until next time…

Paul Schatz
Heritage Capital LLC
http://www.investfortomorrow.com/
http://RetirementPlanningConnecticut.com/

Follow us on Facebook at www.facebook.com/heritagecapital and on Twitter at Paul_Schatz

Tuesday Tax Tip: Connecticut releases brochure for seniors

2011-02-01T15:05:00.000-05:00

The state Department of Revenue Services (DRS) today announced its release of Informational Publication 2010(26) "Connectict Tax Tips for Seniors," which gives pointers on filing state income taxes, as well as sales and use tax exemptions.

“Most seniors don’t look forward to paying taxes, so the least we can do is give them the information they need. Taxpayers want to do the right thing and having access to plain language information is important. Knowing more is also the way senior citizens can be sure to get the full advantage of available tax relief and pay no more than their fair share,” DRS Commissioner Kevin B. Sullivan said.

Connecticut Tax Tips for Seniors provides information on the state income tax — including no state income tax on Social Security benefits for single filers with an adjusted gross income less than $50,000 or joint filers at less than $60,000, and available credit for property taxes paid locally.

Other information covers taxes on sales and use, estates, gifts, property, and real estate conveyances.

DRS this year is encouraging electronic filing and did not mass mail income tax information packets, Sullivan said, adding that printed material still will be available at libraries and post office branches. "DRS will also send out the materials to anyone who calls us. But this kind of publicity, our tax tips guide for seniors and a special effort to get the word out through local senior centers are among the ways we want to be sure no taxpayer gets lost in the shuffle,” he said.

To obtain a copy of "Connecticut Tax Tips for Seniors," or find other revenue information, visit www.ct.gov/DRS.

Securities broker sentenced for embezzling $1.7 million from clients

2011-01-31T18:05:00.001-05:00

Gregory J. Buchholz, 46, of Bridgewater, Conn. was sentenced today to 4 years in prison, followed by 3 years of supervised release for embezzling approximately $1.7 million from at least 10 clients of his financial services business, according to David B. Fein, the U.S. Attorney for the District of Connecticut.

On Nov. 12, 2010 Buchholz waived his right to indictment and pleaded guilty to one count of wire fraud. He was sentenced by U.S. District Judge Janet C. Hall.

“For nearly a decade, this defendant raided the investment accounts of his clients, several of whom are retirees,” Fein said. “I want to recognize the diligent efforts of the FBI and Connecticut State Police, who jointly investigated this matter. The Connecticut Securities, Commodities and Investor Fraud Task Force is committed to investigating and prosecuting corrupt securities brokers and investment advisors, and seeking justice for victims of financial crimes.”

According to court documents and statements made in court, Buchholz, a registered securities broker working as an independent contractor operating a branch office of Raymond James Financial Services, Inc. in Southbury, engaged in a long-running scheme to defraud a number of his clients, some of whom were retirees, by embezzling funds from their investment accounts.

As part of the scheme which began in 2001, Buchholz liquidated investments his clients maintained in various securities, principally variable annuities and mutual funds, and deposited the proceeds of the sales of those securities into his personal bank accounts.

In order to conceal his fraudulent activity, Buchholz also made statements that were designed to lull his victims into not questioning their account balances, Fein's office said.

Buchholz was terminated from Raymond James Financial Services and he no longer is licensed to act as a securities broker.

Raymond James Financial Services cooperated with the investigation and agreed to reimburse victims for their losses. To date, the victims have been repaid the vast majority of the losses they sustained and Buchholz will be ordered to pay full restitution to Raymond James.

Officials in the U.S. Attorney's office, and I'll join them, encourage you to report any financial fraud schemes by calling, toll free, 855-236-9740, or by sending an email to ctsecuritiesfraud@ic.fbi.gov.

Gold gearing up for another rally

2011-01-28T08:45:00.004-05:00

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

As I mentioned in my 2011 forecast, after two fantastic years for gold, I expect 2011 to be more of a digestion or consolidation year with a wide and very volatile trading range. I believe we will see $1500 at some point as well as a $100 down day during the year. When all is said and done, I think gold is going to finish 2011 with modest gains, best case scenario.

Several people have questioned why I don’t think gold has seen its bull market peak yet. As I mentioned in last week’s edition, commodities tend to see inverted “V” tops and long rounded bottoms. That’s exactly the opposite of the behavior we usually see in stocks. As a particular commodity gains steam and acceptance, it usually melts up in parabolic fashion.

The chart below shows where gold is today. IF the rally was terminal, it would have blown off to the upside (straight up) and then begin to go straight down. We’re not seeing that right now. It’s a sideways (trading range) that should eventually resolve itself to the upside.

On the far right of the chart below and the next one, you can see the two possible scenarios for gold in the short-term. I think the shiny metal either continues lower into February towards $1300 and then rallies. Or, we see a quick rally now and then another sell off next month before rallying. Either way, I believe the ultimate resolution to this range is a move back to the upper end.

I want to go back to offer examples of how gold behaves near peaks as I discussed above. Before the last rally you can see in the chart above, gold looked a lot like it does right now.

And before that, below, you can see another example of how digestion and consolidation led to another major rally.

Don’t get me wrong. This is not infallible, but it does have some solid support behind it. The hardest part is judging what’s going on in real time, not hindsight. Many times, the initial top looks like an inverted “V”, but never gets going to the downside or stops going down and begins to enter the digestion.

Case in point on the chart above was the peak you see on the far left side that has the makings of an inverted “V”. I remember turning negative on gold around $990 as I thought a major top was forming. Several months later after the bears tried and tried to make headway without success, the pattern certainly had changed to that of digestion and consolidation and I slowly went to neutral and then positive.

FYI, I will be on CNBC's The Call on February 1 at 11:05am.

Feel free to email me with any questions or comments at Paul@investfortomorrow.com.

Until next time…

Paul Schatz

Heritage Capital LLC
http://www.investfortomorrow.com/
http://RetirementPlanningConnecticut.com/

Follow us on Facebook at www.facebook.com/heritagecapital and on Twitter at Paul_Schatz

Checking your tax return? There's an App for that...

2011-01-27T12:28:00.001-05:00

The Internal Revenue Service is keeping up with the times. This is the first tax season the government agency will offer an application for smartphones: IRS2Go.

“This new smart phone app reflects our commitment to modernizing the agency and engaging taxpayers where they want when they want it,” said IRS Commissioner Doug Shulman. “As technology evolves and younger taxpayers get their information in new ways, we will keep innovating to make it easy for all taxpayers to access helpful information.”

The IRS2Go phone app will also give you easy-to-understand tax tips.

Apple iPhone users can download the free IRS2Go application by visiting the Apple App Store. Android users can visit the Android Marketplace to download the free IRS2Go app.

I just downloaded it to my DroidX.

It opens with four options: Get your refund status (this will prompt you for information specific to your return); get tax updates (which will be sent to an e-mail account); follow us (via the @IRSnews Twitter feed); and contact us.

“This phone app is a first step for us,” Shulman said. “We will look for additional ways to expand and refine our use of smartphones and other new technologies to help meet the needs of taxpayers.”

CT guaranty fund repaid $2.7 million to homeowners last year

2011-01-26T14:43:00.000-05:00

Connecticut's Department of Consumer Protection repaid 335 state property owners $2,728,365 in 2010 to satisfy unpaid home improvement-related court judgments from the Home Improvement Guaranty Fund.
When planning ahead to the spring 2011 home improvement season, DCP reports homeowners should choose carefully, get referrals from people they trust and always work with contractors who are registered to do home improvement work in Connecticut.

All home improvement contractors and salespersons working in Connecticut are required by state law to register annually with the Department of Consumer Protection and the agency keeps a public roster of licensees. A portion of each registration fee is allocated to the Home Improvement Guaranty Fund, a pool of money administered by DCP which is used to help satisfy an unpaid court judgment to a homeowner.

Consumers may be eligible for up to $15,000 per contract from the fund if they experience a home improvement problem that meets certain criteria. The Guaranty Fund can cover actual damages, court costs and attorneys’ fees as ordered in a court judgment, up to $15,000.

Here are some of the parameters:

• The contractor must have been registered with the Department of Consumer Protection at the time the consumer signed their contract, within two years before the contract was signed OR at the time of the court judgment against the contractor.

• The contract must have been for work on residential property (single or multifamily dwellings of six units or less, or condos or cooperatives).

• The total price of the work involved must have been more than $200.

• The consumer must apply to the fund within two years after receiving the court judgment.

More information and applications are available on the Department of Consumer Protection's website or by calling 1-800-842-2649.

Financial and Physical Fitness… More Similar Than You Believe

2011-01-20T22:00:00.001-05:00

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

This is the time of year when traditional New Year’s resolutions are all the rage. Membership departments at gyms are humming. Personal trainers and nutritionists are booked solid. And weight loss infomercials, always popular, dominate the late night and weekend paid advertisement schedule. Who doesn’t want to look and feel better in the New Year? And isn’t that the same thing with our finances? Most people strive for financial and physical fitness early in the New Year! Amazingly, there are so many similarities between the two.

For whatever reason, I have never paid much attention to making a list of resolutions. I could stand to lose a few pounds and get in better shape. I should strive to be a better husband and father. I could give more to charity. But as with most people, I am FAR from perfect! What I have done over the past five or so years is to pick one topic or project that is achievable and focus on it.

Last year, my goal was to become paperless. I wanted to reduce the filing cabinets in my office from three to one. I was so driven that I actually hired a woman whose primary function was this project. And I am ecstatic to report that we’re just about there. For 2012, my big picture goal is to increase our local business (within 25 miles of the office) by 25% through a variety of marketing initiatives.

Getting back to fiscally and physically fit, conventional New Year’s resolutions are usually very difficult to keep. When it comes to weight loss, “diets fail, people don’t” as my friend and fat loss guru extraordinaire Rob Nevins likes to say. I spent some time interviewing Rob just after January 1, by far, his busiest time of the year as you can imagine. Rob, with the energy of 100 people who never sit still, is the poster child and head cheerleader for fat loss through his Rob Nevins Living Lean company and has as many one liners as Rodney Dangerfield.

He shared that 65% of America resolves to lose weight and/or get in shape each year, but 97% fail. I would venture to guess that’s similar to those resolving to put one’s financial house in order. Also similar to my field, he urges people not to become another statistic. Generic diets yield generic results, something I wholeheartedly believe in the investment management business. The “one size fits all” plan rarely, if ever, works successfully. I have always espoused diversifying not only among asset classes, but strategies as well. Who do you know who has successfully retired using a cookie cutter investment plan?

Rob’s philosophy includes being able to enjoy a treat here and there, but starvation is the worst thing of all. Translate that into investing and I would say that taking a flyer every now and then won’t hurt you, but leaving your money in a bomb shelter earning nothing is a disaster. Just like with starvation, the CD or money market mentality allows inflation to eat away at your money day by day, bit by bit until you’re left with nothing but a skeleton.

I asked Rob for some of his “golden” rules for successfully cutting fat and your clothes size. He quickly quipped, “the scale lies, trust your size”. In investing, to me that means asset diversification (modern portfolio theory) isn’t the be-all, end-all. What good is being diversified if all those assets trend in the same direction, like 2008?

In the end, Rob Nevins said that all people should drink 8-10 glasses of water a day and enjoy three meals and two snacks. That’s a huge start, diet or not. It’s hard for me to just list two rules that everyone should follow. But here are two that are common sense enough. When you hear from the experts that “this time is different,” run away as fast as you can. Human emotion hasn’t changed in centuries and it’s never different this time around. Second is that when something seems so easy, so obvious, so universally accepted, the trend is about to violently change.

That wraps up a somewhat unconventional contribution this week. I hope to release my Top Shockers for 2011 next week. You can bet Apple’s fall from grace will headline the list.

Feel free to email me with any questions or comments at Paul@investfortomorrow.com.

Until next time…

Paul Schatz

Heritage Capital LLC
http://www.investfortomorrow.com/
http://RetirementPlanningConnecticut.com/

Q4 in Review

2011-01-13T22:14:00.001-05:00

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

As I reviewed Q4 of 2010, I was shocked to find how many folks had a sudden case of selective amnesia. It’s an affliction that affects people in the investment, usually two years after a bear market.

I think we all know and remember how tough 2008 was. Emotionally, financially, economically, systemically, politically. The very core of capitalism was being threatened, not to mention the very real risk of a modern day depression. Money managers all over the world saw their worst weeks, months, quarters and years of their entire career. The "deer in the headlights" syndrome fell over a good part of the industry.

What I find so "interesting", just three years later, is how many people either predicted the whole financial crisis and bear market or actually had an up year for clients. I cannot remember the last person who told me they got crushed in 2008. All I hear now is "well I knew it was coming" or "we finished in the black". You knew what was coming? You finished in the black what? Hole?

It's really incredible. I don't know if it's revisionist history or selective amnesia, but it sure sounds like a lot of bull to me! While our business really grew in 2008, and none of our programs lost what the market did, I don't think I want to live through a repeat of that scenario any time soon. There was nothing fun about it.

Turning to the highlights of Q4… Lacking during the final three months of 2010 was the theme of non U.S. geopolitical news. On that front, it was nice and quiet! North Korea may have rattled their saber, but that seemed more like a child craving attention than a nation on the verge of war.

The major headline news was two-fold and occurred during the same week in November. First we had the all important mid-term Congressional and Gubernatorial elections where the Republicans achieved an historic victory, more than reversing the tide from 2008. As I've written about before, I believe this will have positive implications for the markets and economy in 2011 by preventing the largest tax increase in history as well as temporarily cutting the payroll tax by two percentage points.

Not to be overshadowed, Bernanke & Co. formally announced the worst kept secret on Wall Street, another round of quantitative easing or QE2 to the tune of another $600B through June 2011. By QE2, the Fed has been buying the Treasury Bonds sold by the Treasury in hopes of keeping interest rates down.

Interestingly, the unintended benefit of QE2 has been the very positive correlation between the Fed's buying and the stock market rising. Almost every single day in December was up for stocks without even a single down day of 0.50%. That is historically remarkable! Given how poorly QE1 ($1.2T) supported the markets, it's astonishing on the surface that QE2 has been a risk investors' home run.

On closer examination, QE1 was attempted while the markets were in a clear downtrend, actually free fall. The government was trying to catch a falling knife. Bernanke & Co. must have learned their lesson as QE2 was initiated during a solid uptrend with much better results so far. Additionally, just like with interest rate cuts, it does take time to have all that money filter through the system. While Q4 was void of bad news, and I certainly hope that continues, the odds don’t favor another long stretch without some shoe falling somewhere.

FYI, I will be on CNBC's Worldwide Exchange on January 20 at 5:35am.

Feel free to email me with any questions or comments at Paul@investfortomorrow.com.

Until next time…

Paul Schatz

Heritage Capital LLC
http://www.investfortomorrow.com/
http://RetirementPlanningConnecticut.com/