The recession officially ended in June 2009, according to the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER), a group charged with determining when recessions officially begin and end. This official end date makes the most recent downturn the longest since World War II. This recent recession, having begun in December 2007, lasted 18 months. Until now the longest postwar recessions were those of 1973-5 and 1981-2, which each lasted 16 months. Recession and expansion dates are based on various economic indicators, including gross domestic product, income, employment, industrial production and wholesale-retail sales. The Business Cycle Dating Committee typically waits to declare that the economy has turned until well after the fact, when it has a longer track record of economic data to confirm a new trend. The NBER said the economy bottomed out in June 2009, followed thereafter by a slow expansion, and its determination of the recession's end does not mean the U.S. is now healthy. The bureau took care to note that the recession, by definition, meant only the period until the economy reached its low point � not a return to its previous vigor. �In determining that a trough occurred in June 2009, the committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity,� the NBER said. �Rather, the committee determined only that the recession ended and a recovery began in that month.� http://ping.fm/t5qiqA balance sheet, also known as statements of financial position, is a snapshot of a business's financial condition at a specific moment in time, usually at the close of an accounting period. A balance sheet comprises assets, liabilities, and owners' or stockholders' equity. Assets and liabilities are divided into short- and long-term obligations including cash accounts such as checking, money market, or government securities. At any given time, assets must equal liabilities plus owners' equity. An asset is anything the business owns that has monetary value. Liabilities are the claims of creditors against the assets of the business. What is a balance sheet used for? A balance sheet helps a small-business owner quickly get a handle on the financial strength and capabilities of the business. Is the business in a position to expand? Can the business easily handle the normal financial ebbs and flows of revenues and expenses? Or should the business take immediate steps to bolster cash reserves? Balance sheets can identify and analyze trends, particularly in the area of receivables and payables. Is the receivables cycle lengthening? Can receivables be collected more aggressively? Is some debt uncollectable? Has the business been slowing down payables to forestall an inevitable cash shortage? Balance sheets, along with income statements, are the most basic elements in providing financial reporting to potential lenders such as banks, investors, and vendors who are considering how much credit to grant the firm. Assets Assets are subdivided into current and long-term assets to reflect the ease of liquidating each asset. Cash, for obvious reasons, is considered the most liquid of all assets. Long-term assets, such as real estate or machinery, are less likely to sell overnight or have the capability of being quickly converted into a current asset such as cash. Total assets represents the total dollar value of both the short-term and long-term assets of your business. Current assets Current are any assets that can be easily converted into cash within one calendar year. Examples of current assets would be checking or money market accounts, accounts receivable, and notes receivable that are due within one year's time. Cash: Money available immediately, such as in checking accounts, is the most liquid of all short-term assets. Accounts receivables: This is money owed to the business for purchases made by customers, suppliers, and other vendors. Notes receivables: Notes receivables that are due within one year are current assets. Notes that cannot be collected on within one year should be considered long-term assets. Fixed assets Fixed assets include land, buildings, machinery, and vehicles that are used in connection with the business. Total fixed assets is the total dollar value of all fixed assets in your business, less any accumulated depreciation. Land: Land is considered a fixed asset but, unlike other fixed assets, is not depreciated, because land is considered an asset that never wears out. Buildings: Buildings are categorized as fixed assets and are depreciated over time. Office equipment: This includes office equipment such as copiers, fax machines, printers, and computers used in your business. Machinery: This figure represents machines and equipment used in your plant to produce your product. Examples of machinery might include lathes, conveyor belts, or a printing press. Vehicles: This would include any vehicles used in your business Liabilities and owners' equity This includes all debts and obligations owed by the business to outside creditors, vendors, or banks that are payable within one year, plus the owners' equity. Often this side of the balance sheet is simply referred to as "liabilities." Total liabilities and owners' equity: comprises all debts and monies that are owed to outside creditors, vendors, or banks and the remaining monies that are owed to shareholders, including retained earnings reinvested in the business. Current liabilities Current liabilities include all liabilities due to creditors that must be paid within a one-year time frame. Accounts payable: This includes all short-term obligations owed by your business to creditors, suppliers, and other vendors. Accounts payable can include supplies and materials acquired on credit. Notes payable: This represents money owed on a short-term collection cycle of one year or less. It may include bank notes, mortgage obligations, or vehicle payments. Accrued payroll and withholding: This includes any earned wages or withholdings that are owed to or for employees but have not yet been paid. Long-term liabilities These are any debts or obligations owed by the business that are due more than one year out from the current date. Mortgage note payable: This is the balance of a mortgage that extends out beyond the current year. For example, you may have paid off three years of a 15-year mortgage note, of which the remaining 11 years, not counting the current year, are considered long-term. Owners' equity Sometimes this is referred to as stockholders' equity. Owners' equity is made up of the initial investment in the business as well as any retained earnings that are reinvested in the business. Common stock: This is stock issued as part of the initial or later-stage investment in the business. Retained earnings: These are earnings reinvested in the business after the deduction of any distributions to shareholders, such as dividend payments. Value measurement Although a balance sheet presents an enterprise�s financial position, it does not purport to report its real value. It can be explained by some following reasons. The values of certain assets, such as human resources, secret processes, and competitive advantages are not included in a balance sheet despite the fact that they have value and will generate future cash flows. The values of other assets are measured at historical cost, rather than market value, replacement cost, or specific value to the enterprise. For example, property and equipment are measured at original cost reduced by depreciation, but the underlying asset�s value can significantly exceed that adjusted cost and the assets may continue to be productive even though fully depreciated in the accounting records. The values of most liabilities are measured at the present value of cash flows at the date the liability was incurred rather than at the current market rate. When market rates increase, the increase in value of a liability payable at a fixed interest rate that is below market is not recognized in the balance sheet. Conversely, when interest rates decrease, the loss in value of a liability payable at a fixed rate in excess of the market rate is not recognized. http://ping.fm/syBbsArt as an investment avenue has been considered an interesting and profitable alternative, but it is also extremely risky. On May 4, Pablo Picasso's "Nude, Green Leaves, and Bust" sold for $106.5 million at Christie's in New York, setting the world record for any work of art sold at an auction. The art world tends to trail the stock market by six to 18 months, says Michael Moses, a retired professor at New York University's Stern School of Business. But those hoping to swoop in on a nascent rally should be aware that even the most beautiful art can carry major blemishes as an investment. "Just like stocks, there are parts of the art market that will perform differently," he says. All told, art lost 5% of its worth in the first quarter of 2010, according to the All Art index, which tracks prices by analyzing some 15,000 repeat sales at auctions. The index plunged 35% during the same time last year. The index tracks only a sample of works that have proven themselves in the marketplace by being sold and resold, so it may not give a complete picture of the entire art market. It does not track the prices of works that have been bought but not resold or haven't been put on the market at all. Expert cautions anyone with less than $20 million in cash to avoid investing heavily in art. Art investment is a black hole. From the moment you buy or sell, there are ongoing costs. As an owner, you have to be realistic. Instead, you should buy because you enjoy what you're doing or are passionate. But don't cloud the issue by claiming to invest. Among the costs of doing business: auction fees, or costs charged to a seller and buyer by an auction house. They vary widely, but can be 20% of the price or more. Such fees, typically printed at the front of an auction catalog, can sometimes be negotiated, and buyers and sellers can sometimes organize bulk discounts, but costs have generally risen over the past few years and show few signs of letting up. Steep specialized transportation, maintenance and insurance costs can also eat into projected returns. Art can be used to reduce risk in larger portfolios, but it is typically not a liquid asset. Generally, works are often held onto for several decades or even generations, and a painting can rarely be unloaded as quickly or easily as shares of stock. And then there are the tax considerations. Art is generally treated as a collectible, like jewelry or wine, making it subject to a 28% capital-gains tax when sold, as opposed to the current maximum 15% long-term capital-gains rate for investments like stocks, says Nadine Gordon Lee, a CPA. Art is also subject to sales taxes, if you buy a painting in London and live in New York, say, you are on the hook for sales tax bill when you come back home. You will also need to reappraise any artwork when it becomes part of an estate or is given away, and owners must keep detailed documentation of a work's history to prove estate tax has been paid on it in the past in order to resell it at an auction. You can't just take something off a family member's wall. Some investors, mostly ultra-high-net-worth or institutional ones, can invest in funds that buy and sell art. The Fine Art Fund Group, a London-based investment house, has $100 million under management and offers funds that specialize in areas such as fine art, Chinese art and Middle Eastern art. The firm may buy and hold work for one day or 10 years, says Fine Art Fund Group founder and CEO Philip Hoffman. The fee structure is similar to that of conventional hedge funds, with the firm charging a 2% management fee and a 20% performance fee after the funds earn a 6% return. Minimum investments range from $100,000 to $250,000. Like stocks, some art sectors will rise and fall at varying rates. Investors should diversify within an art portfolio. Valuing different art classes and how they complement each other can be a tedious exercise in cobbling together numbers from auction houses, sellers and other sources. http://www.dloewi.com/The idea of micro lending, sometimes called micro-finance, is more typically associated with loans in amounts as little as $25, disbursed to impoverished people in developing countries, ideally helping them to generate their own income to climb out of poverty. But more recently, microcredit has become a mainstream practice in the U.S., and even though the average Small Business Administration (SBA) microloan size is $13,000, the SBA's program shares a similar mission as traditional microloan programs. While the microloan program is open to all entrepreneurs, the program especially supports underserved markets. This includes borrowers with little or no credit history, low-income borrowers, and women and minority entrepreneurs who generally don't qualify for conventional loans or larger SBA guaranteed loans, said Pravina Raghavan, director of the SBA's New York District Office Most banks, large or small, do not bother granting business loans of less than $50,000 because there�s not enough profit to balance the risk. By contrast, microfinance programs in the United States typically lend $35,000 or less to small businesses with five or fewer employees. They charge more than traditional banks, of course, with interest rates ranging from 5 to 18 percent. When President Obama signed the American Recovery and Reinvestment Act into law in February 2009 to create jobs and promote spending, the law included $56.1 million for microloans for small businesses, to be doled out through the SBA through September. Targeted toward start-up, newly-established, or growing small businesses, the microloans are short-term loans up to $35,000 each for working capital or inventory and equipment purchases. The intermediary lenders who distribute the loans can choose to lend more than that limit. SBA microloans are disbursed through specially-designated non-profit intermediary lenders across the country that pays the SBA interest of about 1%. A list of the intermediary lenders can be found on the SBA website, The intermediaries themselves can pool funds together to lend as much as $50,000, and interest rates for the small-business borrowers, which are usually no more than 10%, are individually negotiated with the intermediary lenders. Unlike mainstream banks, which focus on an applicant�s credit score, the programs consider passion and commitment to the business. Most require that loan recipients take workshops on money management, marketing and business plans, and some have income caps. Nationwide, since the Recovery Act was signed, the average total dollar amount of microloans made each month has grown to $3.1 million, up from $2.5 million in 2008. SBA intermediaries made 2,717 loans in 2009. In the New York City area alone, the SBA's lending volume increased by 70% in a year. Small-business owners looking to borrow money should research the 20 intermediaries as each has different policies. Only about 1% of small businesses are helped by these loans, and a separate survey showed small-business owners consistently place financing issues near the bottom of their most pressing concerns, according to a Congressional Research Service in 2010, Just 5% of small-business owners said obtaining loans was a critical problem, according to a National Federation of Independent Business survey in early 2008 of 3,530 small-business owners. http://consulting.dloewi.com/The Senate passed landmark financial overhaul bill 60-39 Thursday, following House passage last month. The bill is to be signed into law by President Barack Obama soon. The passage of the sweeping bill ends more than a year of wrangling over the shape of the new rules. The bill marks a potential broad change for the financial-services industry. The legislation creates a council of federal regulators to monitor economic risks; establishes a new agency to police consumer financial products; and sets new standards for the way derivatives are traded. It leaves a vast number of details for regulators to work out, inevitably setting off another round of battles that could last for years. Treasury Department officials have taken initial steps to prepare the new consumer agency, called the Bureau of Consumer Financial Protection and housed within the Federal Reserve. Regulators are in the process of creating a system so that large, complex and failing financial companies can be broken up and liquidated without disrupting markets. The Commodity Futures Trading Commission has designated resources to begin implementing its expansive new authority over derivatives. The Federal Reserve, Federal Deposit Insurance Corp. and Securities and Exchange Commission are also very involved in the implementation. Democrats say the bill will cut the odds of another crisis and better handle one when it arrives. They also contend it will restore confidence in U.S. financial markets, protect consumers and spur growth. http://ping.fm/3HaJfGovernment agencies, industry groups, and non-profit organizations generate a nonstop flow of statistics on the U.S. economy. Economic indicators provide real-time information on the direction of the economy as it relates to economic growth, inflation, jobs, and the health of the financial markets, according to economists. Do you ever wonder what those reports really mean or why they're important to you as an investor? Investors use the economic data to interpret current or future investment possibilities and judge the overall health of an economy. The key information to extract from these indicators is how far they differ from what was expected. Financial markets are forward-looking, and securities prices incorporate economists' consensus forecasts for economic growth, inflation, jobs, etc. Markets react to an indicator only when the actual release of that indicator comes above or below what was originally expected. The best investors will utilize many economic indicators, looking for patterns and verifications within different sets of data. Some major economic indicators are regarded as to more likely influence the markets and so are widely followed include gross domestic product (GDP), consumer price index (CPI), and unemployment rate. The followings are short introductions of those primary economic indicators. Gross Domestic Product: Gauging the economic health Gross domestic product, commonly referred to as GDP, is commonly used as an indicator of the economic health of a country, as well as to gauge a country's standard of living. GDP measures the overall value of the goods and services produced by the U.S. economy in a specific time period; and is often thought of as the most important economic indicator. GDP is made up of several factors, including public consumption or consumer spending; business investment; federal, state, and local government spending; and net exports (exports less imports). Real Economic Growth Rate builds onto the economic growth rate by taking into account the effect that inflation has on the economy. It is a measure of economic growth from one period to another expressed as a percentage and adjusted for inflation (i.e. expressed in real as opposed to nominal terms). The real economic growth rate is a measure of the rate of change that a nation's gross domestic product (GDP) experiences from one year to another. The real economic growth rate is a more accurate look at the rate of economic growth because it is not distorted by the effects of extreme inflation or deflation. Estimates of GDP growth are made each quarter, and the rate of growth or contraction is then expressed as an annual figure. A growing economy typically means more jobs, higher incomes, and more businesses generating profits. For these reasons, GDP growth is often regarded as good news for the financial markets. However, it's possible to have too much of a good thing. If consumer and business spending are growing too rapidly, investors may worry that it will lead to a shortage of goods and workers, pushing prices and labor costs higher and causing inflation to rise. Consumer Price Index: Prices predict inflation One of the most important factors for investors to watch is inflation or deflation, and the best-known indicator of inflation or deflation is the Consumer Price Index (CPI). Large rises in CPI during a short period of time typically denote periods of inflation and large drops in CPI during a short period of time usually mark periods of deflation. Inflation means the rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling. As inflation rises, every dollar will buy a smaller percentage of a good. The CPI tracks the prices of goods and services purchased by consumers. The CPI is calculated by taking price changes for each item in the predetermined basket of goods and averaging them; the goods are weighted according to their importance. Core CPI is released at the same time as CPI and is a measure of the prices of goods and services, minus food and energy prices, which tend to be more volatile. The Producer Price Index (PPI) tracks prices received by producers for their finished products. If the PPI goes up, it's another good indicator that inflation is on the rise. If inflation rises too quickly, it could trigger the Federal Open Market Committee (FOMC) to raise interest rates in an effort to slow down the growth of the economy and thus take some pressure off prices. If interest rates rise, bond and stock prices may drop. On the other hand, when interest rates have fallen significantly, consumers and businesses tend to increase spending, causing bond and stock prices to rise. Unemployment Rate: The job market can influence the financial markets The unemployment rate is the percentage of people in the total workforce who are unemployed and actively seeking jobs, including new entrants into the workforce as well as people who have lost their jobs and are looking for new ones. Each month, the U.S. Department of Labor gathers employment data by surveying individuals and businesses. The unemployment rate is considered a lagging indicator, confirming but not predicting long-term market trends. Rising unemployment generally signals a slowing economy. Falling unemployment is usually good news, signaling economic growth that can benefit investors. However, investors sometimes grow concerned that very low unemployment rates will cause employers to bid up wages and benefits to attract workers, resulting in higher costs and more rapid inflation. While the unemployment rate takes into account both previously employed people and new entrants into the workforce, a weekly report on jobless claims tracks people who have lost jobs and applied for unemployment compensation. This can be an early indicator of changes in employment trends and in the overall economy. Higher initial claims correlate with a weakening economy. http://ping.fm/FqCRDThe U.S. economy continued to grow in the first quarter. National output expanded at a seasonally adjusted annual rate of 3.2 percent last quarter, after growing 5.6 percent in the fourth quarter of 2009. This marked the third quarter in a row the economy showed strong economic growth. Economists are optimistic that the news may breed more confidence about the future turnaround. Increased consumer spending played a significant role in the last quarter expansion. Consumer spending grew at 3.6 percent annual rate in the first part of the year, after growing at 1.6 percent annual rate in the previous three months. The biggest contributors to consumer spending growth were purchases of durable goods like cars. Consumer spending makes up more than 70 percent of the total economy, and it usually drives growth during economic recoveries. Although the growth, concern about the job situation has persisted as the unemployment rate has hovered around 10 percent for the last eight months. The most recently the unemployment was 9.7 percent in March. http://ping.fm/4EomeThe Securities and Exchange Commission (SEC) filed a case to sue Goldman Sachs and one of its employees for civil fraud, alleging they defrauded investors in selling a financial product tied to subprime mortgages, in 2007. The SEC's allegation focuses on a mortgage securities transaction structured by Goldman, for which it allegedly earned $15 million in fees. Goldman allegedly helped hedge fund Paulson & Co., led by John Paulson, bet against those securities, and Paulson's firm made a profit of about $1 billion. Investors in the mortgage securities lost more than $1 billion, the SEC said. The instrument in the S.E.C. case, called Abacus 2007-AC1, was one of 25 deals that Goldman created so the bank and select clients could bet against the housing market. The accusation alleges that Goldman sold a synthetic collateralized debt obligation (Synthetic CDO), to investors. Goldman told those investors that subprime-mortgage securities underlying the CDO were selected by a third-party firm called ACA. However, it was the Paulson fund that had selected the securities. Paulson, in a separate transaction then put up lots of money to bet that those securities would sour. Investors who purchased slices of the CDO collectively lost $1 billion as the mortgage-backed securities quickly soured amid the mortgage crisis. The SEC alleges, Goldman misled investors by failing to disclose that Paulson & Co. also played a role in selecting the mortgages and stood to profit from their decline in value. The SEC claims that Goldman Sachs Vice President Fabrice Tourre was principally responsible for structuring the deal. Tourre, an executive director in London of Goldman Sachs International, was a vice president at the company's New York headquarters at the time of the activities in early 2007, the SEC said. The SEC is seeking unspecified fines and restitution from Goldman Sachs and Tourre. Defaults on the mortgages and the unraveling of related derivatives and debt played a big role in the credit crunch that led to a Wall Street meltdown and the worst U.S. recession since the 1930s. Wall Street slid on Friday, led by bank shares, after Goldman Sachs was charged with the fraud. http://ping.fm/mh1WhGood news and improving economy lifted spirits on Wall Street Wednesday. The Standard & Poor's 500 index broke through a key milestone 1,200 mark for the first since September 2008, after rising 13.35 points to 1,210.65. The Dow Jones industrial average rose 104 points to end at 11123.03, after previous days breaking the 11,000 point for the first time since Sept. 26, 2008. The positive news came from all directions. Corporate earnings numbers show strong results. Shoppers and businesses are feeling better about the improving economy. Retail spending rose sharply in March, while consumer inflation remained all but invisible. Businesses boosted their stockpiles for the second straight month in February in anticipation of higher shopper demand. One of the biggest forces behind the market's climb came from JPMorgan Chase, which reported a better-than-expected profit for the January-March quarter. Intel posted earnings and revenue after the closing bell Tuesday that topped analysts' expectations. JPMorgan rose 4.1 percent, while Intel added 3.3 percent. Retail sales surged 1.6 percent last month, the Commerce Department said, up from February's revised 0.5 percent gain. Increases were posted across the board. Separately, the government said consumer prices inched up just 0.1 percent in March. Excluding food and energy, prices were unchanged in March Fed reported the recovery is spreading to most parts of the country, merchants are enjoying better sales, and factories are boosting production, but companies are still cautious of starting hiring. In its beige book of regional economic indicators, the Federal Reserve was upbeat about the consumer spending, which represents more than two-thirds of gross domestic product in the U.S. But the Federal Reserve Chairman Ben Bernanke told Congress that the recovery is not strong enough to shrink the current 9.7 percent unemployment rate much http://ping.fm/hK4BrU.S. stocks closed slightly higher on Monday, with the Dow Jones Industrial Average finished above 11,000 points for the first time since Sept. 26, 2008. The move was the latest milestone in a rally that has brought Wall Street back from the verge of economic collapse. It came amid signs that U.S. companies were poised to report strong first-quarter profit with earnings season beginning this week, as well as investors welcomed a rescue plan for Greece. On Sunday, European Union officials delivered details of a $40 billion rescue package. The Dow added 8.62 points to 11,005.97. Other Wall Street indexes followed the Dow�s lead. The S&P 500 Index rose 2.11 points to 1,196.48, while the Nasdaq Composite Index climbed 3.82 points to 2,457.87. http://ping.fm/OnXN8Payrolls surge in March marked the beginning of job recovery as employers added 162,000 nonfarm jobs. This good news came from the Labor Department reported on Friday, after eight million jobs lost since the beginning of recession in December 2007. To absorb only new entrants into the labor market the economy needs to add more than 100,000 jobs a month. While the unemployment rate held steady at 9.7 percent, economists saw signs in the latest report that the economy was poised to make steady progress. http://ping.fm/NxLcRThe euro came under more pressure after Fitch, a credit-ratings agency, downgraded its assessment of Portugal�s debt. Meanwhile, Greece got a little bit of good news as the European Central Bank signalled that it would keep its collateral standards relaxed beyond 2010, making Greek bonds less unattractive. http://ping.fm/VIJWMThe economy grew at a faster pace than initially thought at the end of 2009. It grew at a 5.9% annual rate in Q4, up from the Commerce Department's initial reading of 5.7% and the fastest pace in six years. The better-than-expected Q4 growth figure came as companies cut inventories at a slower pace, accounting for 3.9 percentage points of the 5.9% growth figure. Business investment also rose at a much faster pace than initially reported. However, consumer spending, which accounts for about 70% of economic activity, remained weak. For all of 2009, the economy shrank 2.4%, the most since 1946 Meanwhile, sales of existing homes unexpectedly plunged 7.2% in January to an annual rate of 5.05 million units, a seven-month low, following December's record 16.2% plunge. http://myvoiceoflife.blogspot.com/2010/02/revised-gdp-showed-faster-growth-in-q4.htmlThe Federal Reserve surprisingly raised its discount rate by a quarter of a percentage point, to 0.75 percent from 0.50 percent, effective Friday, after holding interest rates to extraordinary lows for more than a year. The Federal Reserve discount rate is the interest rate it charges on short-term loans made to banks as a backup source of financing. It was a clear sign that the era of extraordinarily cheap money was coming slowly to an end. The central bank will try to drain from the financial system some of the money it created to keep banks and the economy afloat over the last two years. And at some point it will begin putting upward pressure on interest rates by raising its benchmark fed funds rate, the rate at which banks lend to each other overnight. The Fed�s action represents a widening of the spread between the discount rate and the upper end of the target fed funds rate. The two rates typically move in lockstep, and were a percentage point apart before the crisis. In an effort to encourage banks to come to it for funds to maintain their stability during the crisis, the Fed sought to make borrowing from the discount window more attractive than usual. The Fed reduced the spread between the fed funds rate and discount rate to half a percentage point in August 2007 and then to a quarter point in March 2008. When the target range for the fed funds rate was lowered to zero to 0.25 percent in December 2008, the discount rate dropped to 0.50 percent, its lowest level since World War II. After the announcement stock futures fell in after-hours trading; yields on 10-year Treasury notes rose about seven basis points, or seven-hundredths of a percentage point, to 3.8 percent; and the dollar gained slightly. http://ping.fm/nwObQFor investors spooked by financial scams and scandals, the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) offer tools to monitor stockbrokers and identify and avoid fraud. They are helpful for investors who are afraid of getting into investing because of recent scandals and the economic meltdown. At FINRA BrokerCheck, you can check the professional background of current and former Finra-registered securities firms and brokers, as well as find any regulatory complaints or customer disputes. You can also see a listing of the broker�s current registrations, licenses or exams passed. At Investment Adviser Public Disclosure, the Securities and Exchange Commission (SEC) offers a similar check for information about investment-adviser firms. Finra also offers Risk Meter and Scam Meter tools, which walk you through a series of questions aimed at identifying vulnerable individuals and investments. For instance, the Risk Meter asks you if you have checked with a securities regulator to see whether an investment professional is licensed. Based on the responses, the tool offers suggestions on how to combat fraud. Likewise, the site�s Scam Meter allows you to check if an investment is too good to be true, asking questions such as: How did you learn about the investment opportunity, and what have you been told about it? From your answers, the site offers warnings and �advice. http://ping.fm/sTY02Having the right mix of stocks, bonds, cash, and commodities in your portfolio, and being well diversified within each asset class, can have a profound impact of your returns. ETFs can be an easy way to gain this diversification. They can be cheap, flexible, and tax-efficient and may help you gain access to sectors and asset classes that would otherwise be closed off to individual investors. The first step in building an ETF portfolio is to figure out the right asset allocation. You will consider your theoretical exposure to cash, bonds, large-cap stocks, medium/small-cap stocks, and foreign stocks. In general, investors with a long time horizon should consider a more aggressive approach weighted heavily toward equities, while people within a few years of needing their money should stick to more conservative investments. After making your decisions and with help of asset allocator tools provided by many financial website, you can know the chance that you will be able to meet your financial goals given how much money you already have invested and how much additional money you intend to invest monthly. Armed with your asset allocation decisions, you can use ETF screeners to discover which securities will help you achieve your goals. For core stock exposure, many investors could be well served by ETFs. There are several inexpensive, broad market ETFs that track major large-cap indexes, like the S&P 500. This can be a very cheap way to gain exposure to the broad market, but investors who are dollar-cost averaging (regularly investing small amounts over time) should carefully watch broker fees that are incurred when buying ETFs, as they may push the overall costs of the investment over that of a traditional index mutual fund. Another important role that ETFs can play in your portfolio is to provide access to alternative asset classes like commodities and currencies. These areas, which used to be available only to institutional investors and high-net worth individuals, can help further diversify your portfolio. Although most investors would want these asset classes to represent only a tiny fraction of their overall holdings, their presence in a portfolio can be helpful because they can be uncorrelated to broader stock market returns. http://ping.fm/ANvBZThe U.S. economy lost 20,000 net jobs during January, while the unemployment rate dipped to 9.7 percent in the month, from 10 percent in December, the government reported Friday. The slowing pace of job loss provided signs that the economy was recovering after the longest recession since the Great Depression. While construction companies and state and local governments cut back, manufacturing added 11,000 jobs in January, the first time in three years. Despite encouraging indications for the future, the government�s monthly snapshot of the labor market revealed that last year�s collapse was considerably more severe than previously recorded. The Labor Department revised previous data to show that the economy contained 1.36 million fewer jobs in December, a downward adjustment of roughly 1 percent. The revisions showed the economy lost 150,000 jobs in December, far more than the 85,000 initially reported. http://ping.fm/Q1ZbtU.S. broadest measure of economic activity, gross domestic product, expanded at an annual rate of 5.7 percent in the fourth quarter, after a 2.2 percent increase the previous quarter. The growth rate was the fastest since the third quarter of 2003, when the economy grew at a rate of 6.9 percent. Even though the fourth-quarter surge, the economy finished 2009 with its biggest contraction since 1946, when the country was still cooling off from World War II. The single biggest factor in the strong growth rate last quarter was not consumers buying more, but businesses letting their stockpiles shrink at a slower rate than they had been previously. As long as the labor market remains weak, consumers will be reluctant to spend money. That means businesses will need to look for other sources of demand, like exports. On net, the economy lost 208,000 nonfarm payroll jobs last quarter, and the unemployment rate rose to 10 percent, from 9.7 percent. The nation�s output number can be subject to major revisions, especially when the economy is at a turning point. The annual growth rate initially reported by the government for the third quarter of 2009 was 3.5 percent, but was later revised to 2.2 percent. The government�s final tally of last quarter�s output will be released in March. http://ping.fm/M0TZMInflation appears to be largely in check even as interest rates in the United States remain near zero and the government pumps billions into the economy. The consumer price index (CPI), a broad gauge of inflation, increased 0.1 percent in December, down from a 0.4 percent advance in November. This is the lowest rate since July. The core CPI, which excludes food and energy costs, also rose 0.1 percent, a tick more than the unchanged reading in November By the end of 2009, prices had jumped 2.7 percent from the previous year. The core CPI rose 1.8 percent in 2009, the same rate as the prior year. The meager rise in the CPI means Federal Reserve policy makers will probably keep interest rates at their historic lows for the immediate future. Many economists believe inflation will not emerge as a threat for some time because of the large amount of excess capacity, high unemployment, and weak housing market. Across the country, machines sit idle or are running at reduced capacity at many factories. A separate report released Friday said utilization reached 72 percent, the highest level in a year. Yet that remained far below the historic average of 80.9. http://ping.fm/PkEpTU.S. stocks finished the first trading week of the year on a high note, with the major indexes all turning higher late in Friday's session. A disappointing employment report had weighed on stocks throughout the Friday. The Dow Jones Industrial Average rose to 10,618.19, giving it a weekly rise of 1.8 percent, while the S&P 500 climbed to 1,144.98, up 2.7 percent for the week. The small cap index, Russell 2000 advanced to 644.69, progress 1.46 percent for the week, and the tech-focused Nasdaq Composite Index climbed to 2,317.17, a level that has it 2.1 percent ahead for the week. This first week result failed to support the widely known January effect anomaly. While the large cap stock index, S&P 5000, was up 2.7 percent; the small cap index, Russell 2000 advanced only 1.46 percent. http://ping.fm/fOmhk | |
