Saturday, March 31, 2007

Bond trading

Investors interested in bonds, which can be less risky than stocks and usually pay regular interest, now have more choices beyond mutual funds.

Following comparison is featured in Wall Street Journal. I don't trade bonds, that's boring for me!

Fidelity.com

Investors can compare prices and terms across roughly 10,000 securities, such as Treasurys, municipal bonds, corporate bonds, CDs and others.

Commissions: 50 cents to $2.50 a bond (prices are twice that if you trade through a sales representative). Investors can also buy newly issued Treasurys online at no cost.

TradeKing.com

Analyze and trade corporate, muni, Treasurys, new issues, CDs and other types of bonds.

Commission: $4.95 per bond ($14.95 minimum per transaction), and $24.95 flat fee for Treasurys and CDs.

TreasuryDirect.gov

Buy newly issued Treasury bonds directly from Uncle Sam in lots as small as $1,000.

Commission: There are no fees to buy or maintain marketable securities, regardless of the amount of holdings.

Zions Direct's Bonds for Less

Compare prices and terms across roughly 10,000 securities, such as Treasurys, municipal bonds, corporate bonds, CDs, and new issues.

Commission: $10.95 flat.

Sunday, March 18, 2007

Blackstone plans to go public

Private equity firm Blackstone group is expected to go public. They are planning to offer 10% of the company thru IPO. Fortress hedge fund's recent successful IPO triggered lot of enthusiasm among financial crowd.

On top of it, Blackstone may think that financial market is peaked, it may be the right time for them to sell the shares. These guys are very smart guys, they took companies like Hertz, Burger King private and improved the performance of these companies.

This IPO offer good opportunity to experienced investors. We can get a piece of private equity game. It's not risk-free. If these guys screw up, investors will be in hot water. But, if history is any indication, investors will be rewarded.

Saturday, March 10, 2007

Paying Mortgage Early?

Prepaying a mortgage may seem like the best thing to do with your extra money. Yet investing the extra cash in a tax-deferred retirement account is often a smarter move, according to research.

Almost 40% of all households that are making extra payments on their mortgage -- or taking on a mortgage that is shorter than 30 years -- would likely be better off investing that extra money in a tax-advantaged savings account such as a 401(k) or 403(b) plan, according to the study, which is continuing. The financial benefit would be even greater if investors receive a company match as part of their retirement-savings contribution, the researchers say.

"We don't want to argue that it's bad" to prepay, says Clemens Sialm, an assistant professor of finance at the University of Michigan's Ross School of Business, who co-authored the study. "It's a good thing to save, but under certain circumstances, you're better off contributing to retirement savings, especially if you get a match."
Using data from the Federal Reserve's Survey of Consumer Finances, which covered the period between 1995 and 2001, Mr. Sialm and his fellow researchers found that many people are so risk averse that they frequently opt for the lower returns of a prepaid mortgage rather than investing in a 401(k) plan.

Assuming an annual growth rate of 5% in a 401(k) plan, the researchers found that at least 38% of households would have earned 11 cents to 17 cents more on the dollar by investing in the plan instead of prepaying the mortgage. Those extra earnings would have resulted in additional annual savings of almost $400 per household.

If the investors had received a company match for their 401(k) of 50% on the first 6% of their contribution -- and contributed that amount -- it would have added $468 a year per household.

Jennifer Huang, an assistant professor at the University of Texas at Austin and one of the co-authors, said she was surprised by the "magnitude of the loss" when savings are put into mortgage prepayments rather than 401(k)s.

To eliminate potential risk, the researchers assumed that the 401(k) investments would be in safe Treasury or mortgage-backed securities. The returns on the 401(k) investments potentially could well be higher if the investments were in equities.

The 401(k) option did even better if the person itemized tax returns and deducted the mortgage interest rate, says Mr. Sialm. For example, someone with a 6% mortgage would, depending on the tax bracket, see the effective interest rate drop by about a third -- to 4% -- after itemizing. In such a scenario, investments in the 401(k) would need to earn only more than 4% after tax for consumers to come out ahead with a retirement investment more than the extra mortgage payment.

Another factor to consider: Investments in 401(k)s benefit from tax deferral, and investors may have a lower tax rate in retirement.

The researchers also found that consumers with a college education and those working with a financial adviser were more likely to choose a 401(k) plan over the extra mortgage payments.

Of course, there are potential benefits to prepaying a mortgage, including peace of mind and more-tangible considerations. For example, adding just $50 a month to your monthly payment on a 30-year $100,000 mortgage could save you $24,546 over the life of the loan and shorten the term to fewer than 25 years.

"There's nothing wrong with having a house that's paid off," says Ralph Wileczek, a senior private-client adviser at Wilmington Trust Co., who points out that you are better off having less mortgage debt if you lose your job. "If you have more equity, it's easier to tap into," he says. But, he adds, "You should absolutely do the 401(k) match. It's free money."

Sunday, March 04, 2007

Criminal Intent

In September 2004, just days after Chechen rebels raided a school in Beslan, Russia, killing 331 men, women and children, the Los Angeles Police Department summoned senior officers to its decaying downtown headquarters.

The issue on the table: What would they do if a similar attack took place here?

Most of the talk that morning was about where to deploy SWAT teams if terrorists ever took over a local school. Detective Mark Severino, one of the city's counterterrorist investigators, then asked his colleagues: "Do we even have Chechen extremists in Los Angeles?" Blank stares and silence filled the room. His boss at the time, Deputy Chief John Miller, told him to go find out.

Within weeks, Detective Severino, working with a team of LAPD intelligence analysts, tapped Russian underworld informants, and uncovered an international car-theft ring that wound its way from the streets of Los Angeles to the Chechens' doorstep in the Republic of Georgia. The California racket was disguised as a charity group sending aid to the region. Based on other information, Detective Severino suspected that the operation was more than just a fraud scheme. His theory: The proceeds from stolen cars might somehow be financing Chechen terrorist operations around the world.

On Feb. 15, 2006, the LAPD busted eight people for fraud in connection with the alleged scam and issued arrest warrants for 11 others. Chechen terrorist financing was never mentioned in the indictments or in the press release that trumpeted the takedown of the operation. There were no news conferences claiming victory in the war on terror. Yet Russian police, U.S. intelligence and State Department officials familiar with the case today all say that they believe the LAPD's breakup of the ring was a setback to international terrorists.

Los Angeles has created one of the most active counterterrorist police departments in the country, often reacting to overseas attacks with its own contingency planning. Interestingly, “24” show also has all the CTU drama in Los Angeles.

The Los Angeles police's low-key strategy is to use local laws -- from parking ordinances to antifraud statutes -- to crack down on suspected terrorists. Each arrest was the result of a conventional criminal investigation using California state law with no need for warrants, phone taps or secret court orders. None of the cases ever mentioned terrorism at all. Trials are still pending in many cases but there have been dozens of guilty pleas. In some cases, suspected foreign terrorists arrested on fraud charges have been scooped up by federal agents and deported on separate federal immigration charges before their criminal trials got under way.

Some civil-rights groups and Muslim organizations are concerned about putting too much counterterrorism responsibility in the hands of local police. Well, whom else you want to be responsible for counterterrorism? We can’t give that responsibility to Talibans.

Hamid Khan, the executive director of the South Asian Network, a local civil-rights group representing many Islamic community groups, says that many Muslims are fearful of the LAPD's reputation for excessive force and view much of its policing efforts in Muslim migrant areas of the city as insensitive. LAPD’s “excessive” force is nothing compared to what local police does in Iraq, Iran or any other Middle East countries.

Friday, March 02, 2007

Job Fair for Emerging Growth Companies

If you live bay area and looking for a job, this may be a good opportunity.

TiE Silicon Valley Job Fair is around the corner. It will be on March 8th, at TiE conference center, Santa Clara.

There will be two workshops by Dilip Saraf, career coach. If you are going to attend this job fair, Good Luck!

India Faces Dark Side of Its Boom

This is the excerpt of the article that was published in Wall Street Journal few days ago.

On a street crowded with bullock carts, B.K. Garg has a front-row seat for India's hottest economic-policy debate.

Mr. Garg's shop sells pulses in the Indian capital's old section. The prices for red beans, green peas and yellow lentil seeds have doubled on average over the past year, helping to turn worries over rising inflation into a controversial topic for India's politicians and economists.

The sparring has intensified ahead of tomorrow's national budget announcement and ahead of coming state elections. Some politicians have called for more rural aid, through increased agricultural subsidies and expanded make-work programs. But others see such moves inflating government debt, crowding out social programs and squeezing infrastructure projects that, longer term, could do more to improve living standards.
At the heart of the debate is India's new paradox: Amid fast growth, the country faces a set of rapidly emerging problems. Inflation is hurting the poor, especially in urban areas. Crumbling infrastructure is choking the flow of goods at home and from overseas. And by some key health measures, such as child malnutrition, the nation is slipping.

With India's economy growing at a 9% annual clip, perhaps only China rivals the country for market promise. But inflation, now running at 6.6% on an annualized basis, has underscored stark differences: India lacks China's new roads and ports and its broad-based manufacturing firepower to ramp up production and stabilize consumer prices.

With so many in India still living on the margins of subsistence, the smallest of price blips for onions or lentils can bite.

In a letter last week to chief ministers of Indian states, Prime Minister Manmohan Singh called the rising price for pulses, edible oils, wheat and milk "a major cause of worry." To improve supplies, he announced an export ban on pulses and milk powder, a cut in import duties on palm and sunflower oil and plans for importing more wheat. The government also set up a panel to keep tabs on daily prices of essential commodities.

For pro-reform politicians, one benefit of inflation is that it offers an opportunity to make policy changes in the name of helping the poor. Last week, India's cabinet approved a cut in a national sales tax. Finance Minister P. Chidambaram is also expected to fill in a roadmap, announced in last year's budget, leading to the elimination of overlapping state taxes that now impede the flow of goods within India. In addition, inflation has prompted reductions in India's import duties, still among the highest in Asia.

But some familiar subsidies are also expected to feature in this year's budget as politicians seek quick relief for the rural poor. One likely measure is more low-interest loans for farmers. A more controversial initiative would be the expansion of the country's rural employment-guarantee system. That program, which offers farmers 100 days of paid work a year, has become a lightning rod for critics of corruption, government debt and political sops.

"The government is used to giving out freebies," says Chetan Ahya, an economist with Morgan Stanley in Mumbai. "The whole model has to shift toward one that is anchored by investment."

Most foreign investment currently goes into liquid financial markets, and could quickly exit if the global mood shifts.

Despite India's strong economy, there are growing concerns that government spending has increased debt to dangerous levels. In a November report, the International Monetary Fund warned that government debt stood at 80% of gross domestic product, and suggested measures to shrink it, including the reduction of subsidies.

Other countries, such as Argentina, have faced crises in repaying much lower levels of debt, says Suman Bery, director general for the National Council of Applied Economic Research in New Delhi. "It is precarious," he adds.

The immediate impact of India's heavy debt load is to squeeze spending. Health and education experts contend that funding shortages -- and poor monitoring of how funds are disbursed -- have sharpened inequalities between urban and rural areas.

Meanwhile, progress in reducing child malnutrition has been "uneven," with the situation worsening in 13 states, according to the National Family Health Survey. The survey also pointed to rising levels of anemia among young children and women.

But as campaigning heats up in Uttar Pradesh and other states this year, it is inflation that has the political spotlight.

Thursday, March 01, 2007

Recession or not?!

May be Alan Greenspan should not be allowed to talk to media!

He said on Monday "It is possible that U.S. will be in recession by the end of the year". Most of the world markets crashed. Market pays more attention to his words than that of current Fed chairman Ben Bernanke.

Today, Greenspan says that "It's not probable for U.S. to have recession this year".

Oh, well, he may feel guilty that he screwed up. But, it's too late. Markets are going to go down before coming back up.