Friday, September 7, 2007

Stock Market Newsletters - Written By Hucksters Or Are Some Really Worth The Price?

My honest opinion is that none are worth the price, and some are indeed hucksters. Think about this with the advent of the Internet, absolutely anybody can publish an investment letter. The cost to publish it is tiny if you can put up your own website and send your own email one subscriber and youre in the black! No one regulates or oversees such folks all they do is publish their opinions through the Internet, and you pay perhaps $150 a year for the privilege of getting their emails. There are no guarantees that they are the smartest guys in the room, and who knows what kind of research they actually do (Look, I do a BLOG on my website, and thats effectively the same as doing a newsletter. The difference is that Im just not charging you anything to see it).

One of the big dangers is that many newsletter writers have monetary ties to the companies they recommend, which you do not hear about. This leads to serious conflicts of interest, and there is virtually no means to find out about it.

For whatever reason (I think because 1. Its the fad, and 2) Its easier) most stock investment letter writers today are chartists of one flavor or another. Well, as the one of the last of the Mohicans when it comes to believing that fundamental forces move the market, let me tell you a big secret among stock commentary letter writers: All the forms of chart reading, from Elliot wave charting to whatever flavor you choose, are simply and purely horse manure. There is simply no scientific support for them. Like palm reading, tarot cards and astrology, chart reading is highly subjective and open to the interpretation of the reader. One need only look to an assortment of Elliot wave experts and see that one looks at the chart of a certain stock and sees it will be heading upward in the future, while another views the same chart and foresees the stock heading downward. Most chart interpretation is based on patterns of squiggles in the chart lines, but how a chart appears is heavily dependent on the parameters of how you draw it. Seeing various head and shoulder or cup and saucer patterns are very much like Rorschach inkblot tests you project your thoughts and feelings onto the meaningless inkblot. Making decisions based on chart squiggles - Yikes!

The prices of stocks and commodities yoyo up and down with a general long-term trend in an upward direction, and it always has been so. Just because a stock or commodity price moves up for a week doesn't mean it will move upward for the next three months. Just because a stock or commodity price moves down for a week doesn't mean it will move downward ward for the next three months. In the same way, just because it was warm in New York for a week in January, it doesnt mean winter is forever banished. Just because we have a couple bad hurricane seasons back to back doesnt not mean all such seasons will be bad from now on (Just ask the morons that used to work at Amaranth - and the poor fools who had their money invested there). What a short memory we all seem to have!

So the next time your letter writer says Its the end of the world! The markets are going down to nothing Just wait and dont get too excited. It wont be long until another letter writer will proclaim Its a moon shot, the markets are going through the roof straight to the moon! Dont get too excited over that either....... The market goes down and everyone gets worried the market will implode. But after a few weeks of solid gains, the worry dries up and the market get overbought. What happened to all that worry?

Theres going to be loads of fast steep drops and sharp jumps in the stock markets, gold and silver from here on out, you can bet on it. These shakeouts are necessary to get weak players out of the market.

I think anyone who studies the fundamental facts and charts can do as well as some over paid letter writer. Most well paid stock market letter writers do not out perform the market, nor do they out perform the stock picks of monkeys armed with darts. I highly doubt those who track commodities or currencies do any better. There are studies done concerning the Hedge Fund operators, the most over paid by market advisors far, showing that they also, do not, as a whole, outperform the market. So why do some folks pay good money for newsletters, mutual fund managers and Hedge fund operators when scientific study shows they are no better in the long run than market indexes? I dont know there is simply no rational reason.

Personally, I think you might as well flush your cash down a toilet as invest in newsletters. You'd be much better off to just buy some gold or silver with the money. Or even better yet, grab a pen, develop a talent for writing BS, and then start your own newsletter, charge other people money and invest the cash you make in stocks or precious metals.

If you feel you just must read some of these newsletters to get ideas there are a number of free sites on the Internet like my BLOG. In addition, a good number of investment letter writers do still publish a printed version of their work, and many libraries still subscribe and you may be able to view them at your local library. There are plenty of free sources to get ideas.

Chris is an independent investor and his market comments can be viewed at:

Chris BLOG on investing in gold, silver, and stocks can be found at:

Chris Ralph writes on small scale mining and prospecting for the ICMJ Mining Journal. He is an independent investor and writes on that topic as well. He has a degree in Mining Engineering from the Mackay School of Mines in Reno, and has worked for precious metal mining companies conducting both surface and underground operations. After working in the mining industry, he has continued his interest in mining as an individual prospector. He can be reached at P.O. Box 3104 Reno, Nevada 89505. His information page on prospecting for gold can be viewed at:

Stock Research - Hedge Funds - If Bear Stearns Doesn't Know - Who Knows?

As the hedge fund world becomes bigger and bigger as more and more hot money seeks the elusive alpha of maximum performance, it is becoming apparent that more and more newspaper space will be devoted to hedge funds, and private equity. Recent news has taken us into the inner sanctum of Bear Stearns, truly a dominant investment firm in the world today. It might be argued that Bear Stearns is the best managed Wall Street firm in existence. Some might say Goldman Sachs. In any event Bear Stearns would have to be on the short list.

Investment firms for almost a decade sat by and watched hedge funds form, and amass vast investment capital pools while successfully charging 2% management fees, and 20% of the profits. Some of these hedge funds in a few years, have grown to possess capital bases equal to that of investment banking firms that have been around for generations. Taking some of the risks that were involved to achieve this performance is now coming home to roost.

Bear Stearns is the latest firm to stub its toe in the hedge fund industry. The firm is FAMOUS for quantifying and judging RISK before making its bets. This time however it seems that Bear Stearns threw its usual caution to the wind in embracing the formation of two hedge funds over the last year or so.

The second hedge fund was considered a more highly-leveraged version of Bears High Grade structured Credit Strategies fund which was formed last year. Both funds were managed by Ralph Cioffi, who up until recent events took hold, had the reputation of being a MASTER at this game, and the game is the subprime mortgage bond business.

Most people are not aware of it but Bear Stearns is the finest fixed income trading firm on the planet bar none, and this has been true for several generations. This makes recent events even more perplexing to understand.

Jimmy Cayne who is Bears CEO is embarrassed at the very least, and certainly upset enough that there will be major changes in the leadership of the units responsible for the pain being inflected on the firms reputation. This should not have happened at Bear Stearns, thats the point.

Actions Taken and Implications

Mr. Cayne has made the decision to inject $3.2 billion of Bear Stearns capital into a bail-out of the older fund. Bear is also negotiating with the banks that put up the credit facility for the other fund, the highly leveraged High-Grade Enhanced Leveraged fund. What Bear is trying to prevent is the forced sale of the debt obligations underlying the funds investments. These issues trade by appointment as they say, which means they rarely trade at all. Bear knows the Street smells blood, and will take advantage of any weakness that Bear shows.

So what are the implications of this latest hedge fund debacle? It clearly shows that the most sophisticated investors on the planet who put their money into hedge funds may in fact have NO IDEA what they are investing in. Instead, they are betting on the institutional reputation of the firms standing in back of the hedge funds. In this case nobody knew more about this market segment than Bear Stearns, yet they caught in a terrible position.

This is not Caynes fault, but as CEO, it is always his responsibility. I believe him to be the finest Wall Street executive of his generation. Nevertheless, his underlings certainly let him down, and they are among the highest paid people in the world today. Some of these industry veterans are drawing $10 million dollar annual incomes. Let the investor beware is the rule of the day, especially when it comes to hedge funds.

Richard Stoyecks background includes being a limited partner at Bear Stearns, Senior VP at Lehman Brothers, Kuhn Loeb, Arthur Andersen, and KPMG. Educated at Pace University, NYU, and Harvard University, today he runs Rockefeller Capital Partners and for a fuller version of this article please visit our website.

How to Pay Sales Tax in QuickBooks - The Right Way and The Wrong Way

The Sales Tax function in QuickBooks is a separate module from the rest of the program, even though it doesn't seem like it. Because it is a separate module, sales tax payments should be made according to how the module works.

The Wrong Way

The unsuspecting QuickBooks user computes the sales tax return. Then, he/she generates a regular check in QuickBooks (a regular check is always designated CHK in the register). Perhaps this check is even correctly posted to the Sales Tax Liability account. Regardless of which account it is posted to, using a regular check to pay sales taxes is not how QuickBooks was designed. Unfortunately, QuickBooks allows this transaction to occur.

The Right Way

1. Compute the sales tax return. Then, adjust the QuickBooks tax payment for rounding differences, if necessary.

In California, the BOE-401 requires every line to be rounded to the nearest dollar. This will create a small difference in the amount of sales tax owed on the return, verses the amount of sales tax owed according to QuickBooks.

In order to adjust for the difference, and if you are certain you are ready to record the payment in QuickBooks, from the Vendors menu select Sales Tax. Then select Pay Sales Tax. Click the button that says Adjust. Make the Adjustment Date the same as the final day of the tax reporting period. Put an Entry Number if you wish. In the Sales Tax Vendor box, select the sales tax reporting agency. For the Adjustment Account, select an expense account called Sales Tax Adjustments (create it if you don't already have one). Then, select the appropriate circle, depending if you are increasing or reducing the amount of sales tax to pay in QuickBooks. Fill in the correct amount of the adjustment. Record a memo if you wish. Click Ok.

2. Generate a Tax Payment check.

At the Pay Sales Tax window, click the taxes you are paying, as well as the adjustment you just made. Make sure the all of the other information is correct, particularly the Pay Sales Tax Through box - this must have the same date as the final reporting date on the sales tax return. Save the transaction.

The check you just generated appears now in the check register that you selected in the Pay Sales Tax window. Go and look for it there. You will see it as a unique type: TAXPMT, rather than CHK or BILLPMT.

Final Thoughts

Here's why QuickBooks users should pay sales tax utilizing the correct method:

  • QuickBooks generates Tax Payment checks (TAXPMT) rather than regular checks.
  • QuickBooks users can perform specific searches for these types of checks.
  • QuickBooks can compute the tax amount - this can then be used as a guide to make sure the sales tax return was prepared correctly.

About the Author: Jennifer A. Thieme is a Registered Tax Preparer and a Certified QuickBooks ProAdvisor who enjoys writing about tax and accounting issues. She brings unique insight, clear instructions, and over ten years experience to all of her business articles. Owner of Solid Rock Accounting Services, Jennifer's clients enjoy these same benefits on a personal and regular basis. You can too - visit and contact Jennifer today.