Heyer Capital, LLC

investment management and timely advice from a local CPA (Fox Valley, Wisc.)

Archive for July 2008

FDIC & bank failures

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It may be a sign of the times that I received a post-silver certifcate certificate $20 bill in change from Aldis over the weekend.  Our currency – now at new lows – used to be backed by gold and silver.  The currency itself was the contract; each bill said (originally) “There is one on deposit in the Treasury of the United States of America $20 Dollars in Silver Coin payable to the Bearer on Demand.”  Older readers may remember being able to take a paper bill into a bank and receive a silver coin in exchange. (Gresham’s Law in reverse, but that’s another post.)

Naturally, as the government printed more bills (made more promises) than there was coin in the vault, the contact is a fraud. So they changed the contract to “The United States of America will pay to the bearer on demand Twenty Dollars.”  Gee, thanks.  I have a paper promise in my hands and as security the government will give me more paper.  Who wins and who loses in that exchange?

  The bill I received is a fairly crisp specimen from 1950.  Could it be that prior to its brief time at the top of the till at Aldi’s, it was securely nestled all these years in the mattress of a poor pensioner who is just now working her way down, like an archeologist, to that tranche of her savings and reserve?

Enough gravy: here’s the meat.  If you have more than $100,000 in any bank no matter how local and trusted, in any account no matter how its titled, you must  review the rules on FDIC.gov.  Do not rely on the gentle assurances of the teller that your $200,000 CD is just fine.  Pay particular attention to the rule differentiation on pay on death (POD); joint accounts; revocable trusts; and irrevocable trusts.  

Of course, if you have $200k in a CD for general savings or anything other than a time-specific goal we need to chat.

UPDATE:  this good post from Mish Shedlock covers a fair amount of ground too.


Written by heyercapital

July 15, 2008 at 12:41 pm


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As I write this, the US markets managed a meager gain to day after finishing the worst June since the Great Depression #1, the Nikkei is suffering its 10th straight down day; the S&P oscillator is pegged at -9, the lowest reading; the market’s Mad Money maven Jim Cramer says M&I bank won’t survive; and market commentators are beside themselves with doom and gloom.

The contrarian in me says, Damn the torpedos. Full Steam ahead!  But that would be too clever by half.  The market is weak for many good and proper reasons. I’ll let you, dear reader, flesh those out for yourself.  Instead I encourage you to wait for a follow through day showing a new rally has possibly begun.

Why wait?  Right now the market trend is down. And “price pays”.  Price is the only thing that matters. Having a boat load of statistics and oscillators at your back doesn’t mean anything if the price action is lower, leading to losses.  The market sets the price, and price pays.

How will you recognize a rally follow through day?  It will comes generally  4-8 days after an intermediate market bottom, and a couple things will happen:  1) broad indexes will advance at least +1.8%; 2) on heavy volume; 3) with many leading stocks advancing on good volume.  Ken Shreve, the markets editor at IBD, said in an interview recently that the follow through day is the correct entry point 3/4 of the time according to their century’s worth of data.  (Think market timing is gambling?  Find a casino game with 3:1 odds in your favor.)

Of course, don’t jump in with all capital right away.  Keep your watch list pruned now. Which stocks have really held up well the past month?  Are they finishing in the top of their weekly price ranges?  And for goodness sake, keep stop losses tight, especially cutting losses at 8% or less to avoid big trouble.

Written by heyercapital

July 1, 2008 at 8:13 pm