Get prepared before the crisis

this is a good article on not how to get rich, but how to get prepared before times of crisis:

After the stock market lost 20% of its value in October 1987, Sam Walton, then one of America's richest men, was unfazed.

In less than a week, the value of his Wal-Mart Stores stock had dropped almost $3 billion, reducing his wealth to a mere $4.8 billion. "It's paper anyway," he told the Associated Press. "It was paper when we started and it's paper afterward."

Given the wrenching swings of the past two weeks, many of us may wish we could be so sanguine about our own losses. But even without a few extra billion dollars in the bank, there are useful lessons to be gleaned from the way the Waltons and other ultrarich families cope with investments and market volatility.

Sam Walton, who died in 1992, was famously frugal, driving an old pickup truck and flying coach.

Just like us, the rich want to maintain their lifestyle, preserve wealth and have money for their heirs or philanthropy. And when it comes to investing, there are several ways the rest of us should take a cue from them:

• The very wealthy have a plan. Sam Walton's plan started in the early 1950s, when, on the advice of his father-in-law, he set up a family partnership, made up of him, his wife, Helen, and their four children, to own his two variety stores. By doing that, he began planning his estate and building family wealth years before he opened the first Wal-Mart in 1962.

Nowadays, most very wealthy people have a team of advisers and an investing strategy in place that should work even when the worst imaginary case becomes real. Small investors, too, should have a comfortable investment process that works in good times and bad.

A financial adviser can be invaluable in helping you with this, but so can a trusted family member or friend who will help you stick to your plan when you start to doubt it.

• The very wealthy live below their means. Walton, who died in 1992, was famously frugal, driving an old pickup truck and flying coach. Many very wealthy people spend much more extravagantly, but even so, "most of our ultrawealthy clients have a lifestyle that is well below their means," says Craig Rawlins, president of Harris myCFO Investment Advisory Services, which serves wealthy families.

When you don't spend everything, he says, "you have a better opportunity to weather this volatility because you know there's a cushion there."

• The very wealthy value cash flow. One of the most painful lessons of 2008 was the recognition that we need to keep enough in cash or liquid investments to weather a stretch when the value of everything else is in flux. Martin Halbfinger, managing director, wealth management, at UBS, says every investor should have a "SWAN" account—for "sleep well at night."

"That's a different number for every investor," he says, but you should have enough in bank accounts, bonds or other liquid investments that you can leave your stocks alone when market volatility defies logic.

Sturdy, dividend-paying stocks also can help. Annual dividends on the Walton family's 1.68 billion shares of Wal-Mart stock add up to $2.45 billion a year, enough to buy plenty of groceries and just about anything else.

• The very wealthy focus on risk, not return. Larry Palmer, managing director, private wealth management, at Morgan Stanley Smith Barney, said he has never had a client say, "My objective is to have my family wealth beat the S&P 500." Rather, he says, clients focus on what kinds of risks they are taking with their portfolio.

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The Walton family wealth long has been tied to its Wal-Mart stock, now valued at $83.6 billion. But Sam also bought the tiny Bank of Bentonville in 1961, and it is now part of the family-owned Arvest Bank, an $11.5 billion banking company. Walton Enterprises also owns a chain of small newspapers that, along with other interests, offer diversification and push the family's estimated combined wealth close to $100 billion.

Small investors need to similarly manage their portfolios, making sure that their holdings of stock and other volatile investments aren't so great that they are putting more at risk than they intended to.

• The very wealthy hang on. The super-rich don't sell because they are fearful—though some may be selling right now for investment reasons, such as cutting the tax bite on holdings with big gains. The Walton family ownership of Wal-Mart stock hasn't changed since late 2002, when some shares were transferred to charitable funds.

In that sense, Sam was spot on. Though the Walton family's Wal-Mart shares have dropped by more than $10 billion since mid-May, until the stock is actually sold, the losses really are nothing more than paper

AGING a major factor to recovery

check article below:

Boomer Retirement Could Slow US Recovery: Fed Study

Published: Monday, 22 Aug 2011 | 1:39 PM ET

Text Size

By: Reuters

The aging of the U.S. baby boom generation may slow an already weak recovery as boomers sell stocks to pay for retirement, according to research released Monday from the San Francisco Federal Reserve Bank.

Many baby boomers have already sold some assets in preparation for retirement, research adviser Zheng Liu and Mark Spiegel, vice president of economic research, said in the latest San Francisco Fed Economic Letter.

"Still, it is disconcerting that the retirement of the baby boom generation, which has long been expected to place downward pressure on U.S. equity values, is beginning in earnest just as the stock market is recovering from the recent financial crisis, potentially slowing down the pace of that recovery," the two wrote.

Demand for U.S. stocks from overseas, especially China and other fast-growing countries, could alleviate the pressure from the expected baby boomer equity sell-off.

But the tight historic correlation between demographic trends and the stock market "portends poorly for equity values," the researchers said.

Real stock prices will likely decline until 2021, to about 13 percent below the 2010 levels and will not return to their 2010 levels until 2027, according to the researchers' model, based on historical patterns.

From there, they said, stocks should rise to about 20 percent higher than 2010 levels by 2030.

foreclosures - CELEBRITIES not immuned

http://www.cnbc.com/id/44193985

click the link, it may not last longer than a week, month and not much longer.

read the details to know how to avoid pitfalls in life.

Dow and HSI

the dow support at 10800 is very important, if it breaks to the south, all hell broke loose.

hsi will not climb above 21040 for a long while, even if it does, it will fall back very fast as a very big island top has formed [aug10-aug11]

hsi should have good support for 19000, however it could reach as low as 16400 if the following supports are broken:
supports - 18947 [first rebound], 17514, 15786, 11900 and then god knows.

how PLUSH can a 60th birthday party be?

are politicians giving too much away towards the financial industries?

Birthdays Are Still Big in Buyout Land

Published: Friday, 19 Aug 2011 | 10:39 AM ET

By: Peter Lattman
The New York Times

When the billionaire buyout titan Stephen A. Schwarzman gave himself a boom-era-defining 60th birthday party in 2007, the global economy was soaring.

Four years and one financial crisis later, the world looks very different. But not much has changed in the private equity world — at least when it comes to birthday parties.

Last Saturday night, the financier Leon D. Black celebrated his 60th with a blowout at his oceanfront estate in Southampton, on Long Island. After a buffet dinner featuring a seared foie gras station, some 200 guests took in a show by Elton John. The pop music legend, who closed with “Crocodile Rock,” was paid at least $1 million for the hour-and-a-half performance.

“The great Sir Elton John performing at my friend Leon Black’s fabulous 60th bday,” wrote the fashion designer Vera Wang on her Facebook page. “I had the honor of dressing his wife, my friend, Debra Black, the hostess! If there was ever a great family … this was it! Xx Vera”

The stars of music and fashion collided with a who’s who of Wall Street. Revelers included Michael R. Milken, the junk-bond pioneer and Mr. Black’s boss at Drexel Burnham Lambert in the 1980s; Julian H. Robertson Jr. , the hedge fund investor; Lloyd C. Blankfein, the chief executive of Goldman Sachs; and Mr. Schwarzman, head of the Blackstone Group.

Rounding out the guest list were politicians including Mayor Michael R. Bloomberg and Senator Charles E. Schumer of New York, who rubbed elbows with media celebrities like Martha Stewart and Howard Stern.

“Leon throws some good parties, because Leon’s worth like twenty gazillion, like twenty billion or something crazy, and for him, you know, a billion dollars is like ten dollars to us,” Mr. Stern said on his Monday show on SiriusXM Radio. Mr. Black sits on the company’s board.

Opulent celebrations thrown by the rich and famous are de rigueur in New York and Hamptons society. And in buyout land, there is something about private equity bosses and 60th birthdays: In 2002, David Bonderman, co-founder of TPG, had the Rolling Stones and John Mellencamp play at his celebration at the Hard Rock in Las Vegas.

But where Mr. Schwarzman’s $3 million birthday party came to be seen as a symbol of a new Gilded Age, a party like Mr. Black’s — at this moment in time — appears to some to be something else.

“It displays a kind of moral bad taste given the vast economic problems in the country,” said Michael M. Thomas, a former Lehman Brothers partner who writes novels about Wall Street. “This behavior suggests they are isolated from the rest of the world, living behind these great big hedges, and in a way they are.”

Mr. Black is no parvenu, having been a fixture on Wall Street for decades. When Drexel collapsed in the late 1980s, Mr. Black started a firm to buy stakes in troubled companies. Today, that firm, Apollo Global Management, manages $72 billion in assets and is publicly traded. Its holdings include Caesars Entertainment, the world’s largest casino company, and LyondellBasell, a big plastics and chemicals business.

Mr. Black, a major philanthropist to various scholastic, medical and cultural institutions, has also used his riches to amass a world-class art collection. In 2009, at a Christie’s auction, he paid about $47 million for a chalk drawing by Raphael of a woman’s head.

While much of the nation’s economy has struggled to recover from the financial crisis, Mr. Black’s firm — and the rest of the private equity industry — has snapped back. Though their deals are a far cry from the record takeovers struck in the last decade, multibillion-dollar buyouts have returned as banks extend corporate loans again. And pension funds and global sovereign wealth funds, faced with poor performance in stocks and bonds, continue to commit billions to private equity in the hopes of juicing their returns.

Apollo has long been considered one of Wall Street’s most skilled investors. The firm made a killing during the financial crisis. Its big bet on distressed debt at the market bottom in 2009 earned the firm and its clients billions of dollars in profits.

The industry’s continued success has made it a target in Washington. At issue is the low 15 percent tax rate paid by private equity executives on “carried interest,” or the share of profits that fund managers receive as part of their compensation. Eliminating this provision would raise $21 billion over the next decade, according to the Congressional Budget Office.

Mr. Black, speaking at a conference early last year, said he was resigned to a tax increase, saying that “it wouldn’t be the worst thing in the world for some adjustment.”

Yet he has also been an outspoken opponent of certain proposals that would raise taxes on him and the private equity industry. Last year, Mr. Black visited Capitol Hill to meet with lawmakers and make his case.

Mr. Black, through a spokeswoman, declined to comment.

On Saturday night, to be sure, there was little talk of carried interest at the Blacks’ home on Meadow Lane, one of the Hamptons most desirable addresses for its panoramic views of the Atlantic Ocean and Shinnecock Bay. He counts among his neighbors Calvin Klein and David H. Koch, the billionaire industrialist.

Mr. Black had his backyard transformed into a faux nightclub setting, constructing a wooden deck over his swimming pool and building a tent for Mr. John’s concert. After a buffet of crab cakes and steak, partygoers sat on couches with big puffy pillows. They watched Mr. Black’s four grown children deliver touching toasts to their father, including a poem by the youngest son.

“Oh, I wish I was Leon Black’s child,” Mr. Stern said on Monday.

Mr. John then took the stage and performed many of his hits, including “Your Song,” “Benny and the Jets” and “Candle in the Wind.” He joked that he knew how important 60th birthday parties were because he recently had one. (He is 64.)

Before the concert, around 8 p.m., as a full moon rose over the Atlantic, Mr. Blankfein and Mr. Schwarzman stood at the foot of the stairs leading down to the beach. Guests overheard Mr. Blankfein playfully ribbing Mr. Schwarzman about his fin de siècle affair.

“Your 60th got us into the financial crisis,” Mr. Blankfein is said to have told the private equity titan. “Let’s hope this party gets us out of it.”

how big an APPLE can be?

want to know how much you contribute to apple by buying iphone, ipad and mac air?
read below:

Apple as Big as Europe's 32 Top Banks—Combined

Published: Friday, 19 Aug 2011 | 12:00 PM ET

By: Reuters

Technology giant Apple [AAPL  356.03    -10.02  (-2.74%)   ] is now worth as much as the 32 biggest euro zone banks.

That's the stark result from a steep fall in the share price of banks including Spain's Santander [STD  8.72    -0.37  (-4.07%)   ], France's BNP Paribas [BNP-FR  32.75    -1.46  (-4.27%)   ], Germany's Deutsche Bank [DB  38.44    -1.46  (-3.66%)   ] and Italy's Unicredit [UNCFF  1.32    -0.08  (-5.71%)   ], compared to a steady rise in Apple's valuation, according to Thomson Reuters data.

Earlier on Friday the DJ STOXX euro zone banks index fell 4 percent, valuing its 32 members at $340 billion. That's based on the market capitalization of their free-float shares, which for some French banks in particular is less than 100 percent.

The index has crashed by a third since the start of July, hammered by fears banks will lose billions from their holdings of euro zone government bonds and a failure of policymakers to stop a euro zone debt crisis from spreading.

The euro zone banks have lost three-quarters of their value since peaking in May 2007.

In contrast, Apple's market capitalization has soared to $340 billion on the back of the success of innovative technology products like iPods, iPhones and iPads.

FEAR & possibly Overreaction

another one from CNBC:

What Traders Are Saying: Uncertainty Stalks London

Published: Friday, 19 Aug 2011 | 10:14 AM ET

By: Matthew West and Katy Barnato
Associate Editor and Assistant Editor

Traders in the City of London, one of the financial districts of the UK capital, see a market environment where trust has all but evaporated and the best course of action is often, in the words of many spoken to by CNBC.com, to do absolutely nothing at all.

After three days of relatively slow trade more typical of August, markets plunged on Thursday and again Friday, with European shares suffering their biggest drop in nearly three years, as market volatility across the globe continued to threaten widespread panic.  

A trader who identified himself only as Graham said between sips of beer in a Canary Wharf pub that the prevailing attitude in his workplace is this:

“The best bet right now is to do nothing. Every time you put risk on, you lose money. Every time you take risk off you lose money. You’re better off going away on a nice long holiday and hoping the fuss has died down by the time you come back. You’re also serving your clients better by doing nothing—although they won’t see it like that, and neither will the bank, and it’s not exactly what you get out of bed and go to work for.”

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Those sentiments were echoed by other traders who shared their feelings with CNBC.com, including one who suggested he might not re-enter the market this year at all.

“I am biding my time," he said. "I won’t re-enter the market before January or February—maybe March. I don’t have the heart for it, with markets rising and falling 500 basis points at a time. I am superstitious, and after a loss, I need a gain to be double the size of that loss, to maintain mental equilibrium.

“I don’t think there’s any more bad news coming—like the S&P downgrade for example—but I think the bad news we have already had needs time to crystalize. I think things will start to settle down in September or October ... At the moment, I’m sitting with my hands under my thighs [to prevent himself from making trades].

“July and August are always quiet months, with European countries like Italy on holiday for a whole month," he said. "I think markets would be going down anyway, but the lack of liquidity available is exaggerating the downward impact of bad news.”

Other traders told CNBC.com of their fears over what the future would bring, including the threat of a US recession, slowing demand from China or another sovereign debt crisis in Europe.

“The second half of the year is going to be awful. I’m actually very positive in general, and never really thought about confidence, but I don’t want to go out and buy anything, because I’m worried about my job,” Siamek, a trader at a large investment bank, explained.

“The way you act is based on how clear the future is to you," he continued. "At the moment, there are too many uncertainties that you don’t really have the confidence to do anything about it.

“The fear factor is definitely there. There’s the S&P downgrade and then there’s China to worry about and what happens if the Chinese economy slows down because that hurts global demand and a slowdown in global demand hurts Germany so that’s something  to worry about as well,” he added.

What also concerned Siamek was the lack of political leadership on issues that were clearly creating much of the volatility. He argued that markets knew Germany could never let the euro fail as a currency, as its own economy’s future was directly tied to the fate of the euro.

“Germany needs the single currency in order to export, so it will do anything to save the euro. Simple as that. Germany will do whatever it takes to save the euro,” he said.

He added the markets needed to see decisive action from northern European nations, but suggested a euro bond was not the answer, preferring a two-tiered Europe over greater fiscal and political union , which he believes would take far longer to achieve.

The level of fear in the markets is such that traders are even asking their fellow bond traders for half a basis point on top of the yield for 20-year German bonds before they're willling to buy, according to one bond trader.

“It’s a nightmare out there at the moment. You have guys that are haggling with you over a 20-year German bond, and they’ll mark the price up half a point from the screen. So you’re looking at the screen and you know the price, but they’re still asking for an extra half a point. That’s how little confidence there is,” he said.

The bond trader, who wished to remain anonymous, added that “across the board” traders were taking risk off. 

“No one is putting risk on, no one is doing anything unless they’re covering a short," he said."People won’t bid on stuff."

“There’s a ton of volatility in the market, and there’s hardly any liquidity, and there’s a bunch of  (junior traders) who are too scared to buy or sell and don’t act because the senior brokers are on holiday and they don’t want to get into trouble for making the wrong decision.

 “When the market is down like today [Thursday] it could be a buying opportunity, but the junior brokers don’t want to get in the market with so little liquidity in case it goes wrong and they lose money,” he added.

What many complained about was also the lack of real information available. Traders told CNBC.com that speculation was being reported by the news media as hard fact, which was only helping to push volatility further. They added that a lack of fundamentals is also hurting market sentiment.

The recent—and as it turned out unfounded—report that French bank Societe Generale was so exposed to Greek sovereign debt that it would need to be rescued by the French government was one particular example that traders repeatedly cited.

“The markets are reliant on the information that they get," one trader said.

“If that information comes from the Financial Times, then it’s already priced in but look at the rumor about Societe Generale that came from the Daily Mail and turned out to be nonsense. That caused chaos, and at first the Daily Mail said they had a source and then had to come out and say, ‘actually we don’t have a source.’”

He added that such was the fear of the next news story and traders' general mistrust of the information they're receiving, that they're turning to Twitter to help them make decisions.

“Traders are using Twitter for information because traders will communicate with each other over Twitter and you can reach a whole group of people with one tweet -- it saves on texts. Work can’t stop you because it’s a private communication. If you look for one of the highest trending topics last week on Twitter one of them was SocGen because all the traders were using Twitter to talk to each other and get their information.,” he said.

However two equities traders who spoke to CNBC.com had a more sanguine view of the markets. “It’s probably just a crazy August. There are a lot of junior traders who can’t make decisions,” one said.

Meanwhile, the other summed up his advice like this: “Hold commodities, gold as a safe haven and invest in emerging markets, but if Chinese demand collapses, then it’s the end for commodities.”

EUROPEAN TURMOIL

a very good article from CNBC:

Europe's Debt Crisis Won't End Until Greece Defaults

Published: Friday, 19 Aug 2011 | 1:42 PM ET

By: Jeff Cox
CNBC.com Staff Writer

Allowing deeply indebted European countries the chance to restructure their obligations seems to be the most direct approach to resolving the problem, yet has been met with resistance that likely will only prolong the crisis.

The reason: What once was thought to be a minor problem involving only some smaller peripheral nations in the European Union is now increasingly being recognized as a global train wreck about to happen.

"The problem in Europe is that the banking and national interests have been uncommonly incestuous over the years with banks in France owning the debts of companies in Spain and Spanish sovereign debt, while the banks in Spain own the debts of French companies and the French sovereign," Dennis Gartman, hedge fund manager and author of The Gartman Letter, wrote Friday. "In that environment, as one area of the economy contracts, others do also in a rush to liquidity and to the detriment of all."

The eurozone debt dilemma has been one of the root causes of market turmoil over the past two months, even though the problems have been known since at least early 2010.

Until recently, the popular narrative was that the debt burdens in smaller nations like Greece and Italy would be contained and not cause widespread contagion. That belief, though, has waned amid revelations that some European Union banks are having trouble raising capital. The ability to raise money would be critical in the event of defaults, as banks holding the restructured debt would have to recapitalize.

Suddenly, a problem that looked small and manageable now has much broader implications.

"We are finding out here that all economic activity requires a leap of faith and a sense of psychological assent that can shred at a moment’s notice, taking the cloth of society and tearing it asunder," Gartman said. "This is the perfect storm of a crisis of confidence and at the moment all confidence is lacking and waning."

Dual reports this week indicating that a European bank had borrowed $500 million from the European Central Bank, and that the Federal Reserve was looking into the stability of the EU financial system, helped shake confidence further.

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Current DateTime: 10:44:24 19 Aug 2011
LinksList Documentid: 44205305

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The market already had been in the midst of a seven-week rout fueled by the stalemate in Washington over the debt ceiling and concerns that the US was heading back into recession.

The overhang of the eurozone crisis has fueled anticipation that economic problems are accelerating—and is drawing calls from numerous quarters that the EU stop denying the severity of the debt problem and start employing solutions.

The idea is that once Greece defaults the country, and others in the same boat, will be able to restructure their debts in an affordable manner. While the cascading defaults will cause pain, they also will pave a way back to stability for the indebted countries.

"How does this thing end? It ends when the politicians stop kicking the can down the road and they allow Greece to default and they allow Greece to exit the euro," William Browder, CEO of Hermitage Capital Management, told CNBC. "At the end of the day, I don't know how many cans they're going to kick down the road."

The extent of contagion from allowing a default, though, is an unknown, making employing a solution elusive.

One estimate is that the ECB has a 444 billion-euro ($634 billion) total exposure to the peripheral PIIGS—Portugal, Italy, Ireland, Greece and Spain.

On the US side, domestic banks have little direct debt exposure to PIIGS debt but they do have counterparty risk to European banks, which analyst Dick Bove at Rochdale Securities recently put at just over $190 billion, including about $10 billion from Greece.

Greece has gone to the ECB for about 60 billion euros in funding to cover a loss in private-sector deposits. However, Italy also has sought funding even though it has suffered no drop-off in deposits, a move that added to the mystery of how deep the debt problem runs.

"The latter is also the key reason why the Italian crisis has triggered global risk aversion and stressed other markets as well," analysts at Bank of America Merrill Lynch said in a note.

That stress is likely to continue until policymakers are willing to grapple with the difficult decisions that ultimately will have to be made.

"We hear rumors of problems in funding, on the part of various European banks, from the largest to the smallest and we do not doubt that for a moment," Gartman wrote. "Of course some banks are finding it difficult—if not nearly impossible—to fund themselves. We are at that moment in time when the strangest things take place."