Poor State’s Financial Conditions

Most of this country’s states are having financial trouble. Pension and other poorly undertaken contracts are making it impossible for most to balance their budgets. Spending cuts have not kept up with demand for state services and outlays.

                       

Yet, legislators keep handing out promises and largess as if prosperity still reigned. School costs keep growing. Public service and government-worker union pressures are destructive for officials seeking budget solutions.

Unionized employees often get 70% or more of their income for retirement each year, after only thirty years or so of work. Chicanery is also at work. Many government pensions are permitted to be ‘spiked’ upward with overtime pay and raises, before retirement.

                       

Remember: It takes $1 million in capital funds at 5% to get only one $50,000 annual pension per worker per year. And that 5% is not being achieved these days.

                       

Bankruptcy to break pension contracts is not an option for states, without federal law changes, but maybe for cities and towns. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole tweets.)

   

Investing in Gold?

                   

The market for gold as coins and bullion has been rising, thanks to economic fears.. I have frequently commented on this because I feel gold can be too speculative for most folks who have no idea about its downside.  It can fall sharply, with any attempts to balance the U. S. budget, which will have to be eventually done. And gold does not earn income or revenues upon which to establish intrinsic value.

                       

It’s a psychological defensive weapon in many ways; but psychology can change from time to time..(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole tweets.)

Securities Analyst Achievements?

                   

Securities analysts give you investment advice. They suggest what securities to buy and sell.

                       

Analysts constantly critique management of publicly owned companies. They claim to know what products and services companies ought to produce and what they should charge. Analysts propose when to hire and fire top executives.

                       

Yet very few analysts have hands-on ability to understand how any business operates from the inside. They are not even that proficient concerning Wall Street inner activity. They generally haven’t the business experience to successfully run a pushcart. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole tweets.)

Actual Income Tax Costs

                    

There is a hidden personal tax cost the government never mentions. The media hardly ever brings it up, even at tax payment time.

                       

We shall leave the question of how much business taxes cost individuals who are not in business, but instead look now at direct hits to everyone’s pocketbook.

                                           

Some facts: Personal tax has additional expense composed of two parts: One is the effort that goes into the preparation, even when done by an outside preparer.

                       

And the second is the actual cost of preparations. Time is important because it is spent with enormous aggravation. Then, estimates of out of pocket costs are at least 30% that of the actual payments made by average individuals.

                       

That approximate 30% tax increase is on everyone, small incomers, middle classes and not just the favorite  scapegoated “rich.” (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole tweets.)

Understanding the Corporation Auditor’s Report

                  

Most investors never bother to read a corporate prospectus. I suggest they attempt to understand the Auditor's Report in the 10-K form that is filed with the 

S E C.

                       

Look for this key sentence: "In our opinion, the financial statements present fairly...the financial position of the company." That means the company has honestly described its finances over the past year to the best knowledge of the accounting firm that is auditing the 10-K. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Doubtful Media Investment Strategies

                    

When the financial media discusses investment strategies, it’s about a favorite of someone being interviewed or reviewed. Perhaps the strategy is actually a public relations release, disguised as financial news.

                       

The purpose of investigations I have done of thousands of independent studies and investing techniques, have helped me delve into the investment strategy phenomenon.

                       

My conclusions often differ with that of the media. They are not up to the task, and most reports are not

objective. So real strategies get short shrift.

Yet, proper strategy use increases the odds of investing success. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole tweets.)

Commercial Credit Evaluations

                   

The bulk of commercial credit ratings are done by Moody’s, McGraw-Hill’s S&P, and Fitch Ratings, the three largest of just a handful of government-approved services.

                       

Critics say they did poor evaluations of credit-default swaps and subprime debt issues. And in this way contributed, to a great extent, to the 2008-2009 financial downturn. There were also charges of conflicts of interest.

                               

Payments for ratings are made by firms who sponsor the evaluations.That is, those who issue the debt obligations.

                       

What is needed is more competition. That means more credit evaluation services being recognized by our regulators.

                       

And more diligence by borrowers. That would be the ideal way to prevent serious credit rating problems from developing again. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole tweets.)