Archive - March 2009

1
Inflation, Deflation, Disinflation – What’s the Difference?
2
SEC Head Schapiro Indicates Support for Fiduciary Standard
3
Historical Cash Positions & P/E Ratios
4
When Buying or Refinancing a Home You Should….
5
Geithner and Schapiro Outline Proposed Reforms of Financial Regulations

Inflation, Deflation, Disinflation – What’s the Difference?

Increasingly in the media, there are discussions relating to deflation: are we experiencing deflation, and is deflation worse than inflation? Occasionally, discussions of the economy refer to disinflation. This will be the first in a series of posts exploring price changes and their implications for investing.

Inflation: our old familiar friend
Inflation is a pretty familiar phenomenon for most people; we’re used to seeing prices go up generally over time. If you’re old enough, you may even remember the 1970’s, when prices spiraled dramatically upward and President Gerald Ford encouraged everyone to respond by wearing “Whip Inflation Now” lapel …

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SEC Head Schapiro Indicates Support for Fiduciary Standard

One of the regulatory issues that many financial planners are concerned about is the current disparity between the rules governing Registered Investment Advisers and those that govern brokers.  Registered Investment Advisers, who are regulated by the states and/or by the SEC, are normally required to act in their clients’ best interests; they are fiduciaries.

Under current …

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Historical Cash Positions & P/E Ratios

The above chart indicates the amount of cash investors have held as a percentage of the Wilshire 5000 at any point dating back to 1974. First, this chart confirms the belief that people invest money when they feel good, and pull money out of the market when they are fearful. Look at the 1990s. The percentage of cash not invested in the market steadily decreased throughout a decade where returns were constantly high. Consequently, in percentage terms, more money was invested in the stock market right before the crash of 2000 than during any other period studied. Additionally, you can …

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When Buying or Refinancing a Home You Should….

Make sure you understand the fine print!

It’s a great time to buy or refinance a home. Interest rates are extremely low (As of Jan 2009 a no points, 30 year fixed, mortgage rate of 5% is very common). While this great interest rate opportunity creates a terrific chance to lower your monthly payment, it also can create confusion. The confusion lies in understanding the good faith estimate (GFE) and the HUD closing statement.

The GFE is the proposal the lender sends to you outlining your projected closing costs and the new mortgage payment amount. So often people will only …

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Geithner and Schapiro Outline Proposed Reforms of Financial Regulations

Treasury Secretary Timothy Geithner and Securities and Exchange Commission Chairman Mary Schapiro each testified before different congressional committees today to disclose their recommendations on regulatory reform of US financial markets.

Geithner’s Testimony
Geithner, who spoke to the House Financial Services Committee, offered a six-point proposal to address oversight of major players in the finance markets and prevent many of the problems that led to panic in financial markets last year:

Identify a single regulator to supervise financial firms of all kinds and make sure that they do not take on excessive financial risks.

Increase the capital reserves that large

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