Your Questions About Investing

Richard asks…

What has been your experience investing in Tax lien certificates?

My husband and I have been purchasing tax lien certificates in Florida and I would like to know if anyone out there has experience investing in other states and what that experience was like. We are planning on investing in other states but would like to know the best ones with the highest interest and least amount of redemption period. Thanks for your input!

financi4 answers:

Most people think they are getting an equitable and forecloseable interest in the property instead of an instrument bearing interest ion payment if it ever happens.

A risk like any other investrment

Chris asks…

How do you start smart investing in stocks?

I was told to do stock options over investing in stocks? Yet,I find the risk factor is too high in options. So I rather invest more in stocks and see what type of outcome manifests itself. What would be the first step? Besides going on these sights like Etrade etc. Is wall street still open for the little guy? Please help!!!

financi4 answers:

The first step is to educate yourself. There are many books on investing (Investing for Dummies?), and many, many online sites that can help. Every major investment company has a web site with educational info (Schwb, Vanguard, Fidelity, T Rowe Price). Also every mutual fund company. Most novice investors start with money markets and mutual funds. See for info and fund evaluations.

You need to understand a) the risk of whatever you invest in. There are different kinds of risk, and EVERY investment has SOME kind of risk, even Treasuries.
B) how the investment works: will it produce interest income, dividend income, capital gains, tax writeoffs? How valuable each of these is to you depends in part on your tax bracket and what your goals are (how far along in life you are–are you investing shortterm and need money in x years or months, or are you investing for your children’s education or for your own retirement?) Don’t invest in anything you don’t understand!
C) if someone is selling this product to you, what is their commission? Some products cost 7% upfront. This reduces the amount that is actually invested. If you are buying online, what is the per-trade commission? Are cheap commissions important to you, or is it more important to have a person you can talk to and ask questions of? This will determine WHO you invest with.

Here’s a web site with lots of info:

And here’s a picture of the “investment risk pyramid”, showing least risky investments, going up to the most risky investments.

Good luck to you!

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Your Questions About Which Of The Following Is Not A Part Of Comprehensive Income

Joseph asks…

Can you review my answers Accounting Please Thank in advance…?

which of the following is not a part of comprehensive income? is it b
a. foreign currency items
b. restricting charges
c. unrealized gains and loses
d. pension liability adjustments

which of the following is a none cash investing and financing activity (is it D )
a payment of a cash dividend
b.payment of a six month note payable
c.purchase of merchandise inventory on account
d.issuance of common stock

the statement of cash flows may be issued by management to ( is it A )
a. assess to asses liquidity
b. assess the major policy decision involving investment and financing
c.determine a dividend policy all the above

Which of the following should be deducted form net income in calculating net cash flow from operating activities using in the direct method ( is it B)

a. depreciation expense
b. amortization premium on bond payable
c. a loss on the sale of equipment
d.dividends declared and paid

On the statement of cash flows the cash flows from operating activities section would include IS IT (B?)
a. receipts from the issuance of capital stock
b. payment for interest on short term notes payable
c. payments for the acquisition of investments
d. payments for cash dividends

financi4 answers:

Here’s my best guess:

which of the following is not a part of comprehensive income?
B. Restricting charges

which of the following is a not a cash investing and financing activity
b.payment of a six month note payable

the statement of cash flows may be issued by management to all the above

Which of the following should be deducted form net income in calculating net cash flow from operating activities using the indirect method
b. Amortization premium on bond payable

On the statement of cash flows the cash flows from operating activities section would include
b. Payment for interest on short term notes payable

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How to financially last through a lawsuit you filed

While we hear about big lawsuits that get the plaintiffs millions from malpractice, most lawsuits end in a small settlement or dismissed outright. Granted the term small is relative, but it’s not always something that can set you for life. Either way, you have to wait until the end to get your money. These things can take a long time, especially if a settlement can’t be reached.

While there are attorneys that will take on your case and front the fees, that’s not always the case. Or the lawsuit may be long and drawn out, mean while you may be financially strapped due to the reason of the lawsuit such as injuries sustained. There are always expenses that you may not normally have if the events that led to the lawsuit haven’t occurred.

There are ways to get by, such as lawsuit loans from AnyLawsuits. Basically it’s a loan on what is expected out of the lawsuit. They help you pay for attorneys fees and any expense to help you get by. They’re usually risk free on your part and don’t have to be paid back if the lawsuit doesn’t go your way.

If your lawsuit has a good likely hood of winning then one of these loans may be a good fit for you, especially if you’re having problems with getting by during the lawsuit.

They may not be a good choice for everybody but it’s something to educate yourself about if you’re thinking about going through with a lawsuit but are having some doubts about it financially. Definitely look into these types of loans if a lawsuit is causing you to struggle financially and causing you hardships. Money is always better now than later.

If you were wronged, don’t let money be the reason you’re not righted. Check them out and get to know more so that you can be empowered with knowledge that will help you fight the good fight and get those that wronged you.

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Your Questions About Invest In Gold Or Silver

Mark asks…

If I invest in gold or silver and keep it in a safety deposit box?

How do I pay taxes on it, once I sell it? Let’s say I buy a lot of real gold and silver that are in bars. How would I go about selling it in the future and paying taxes on it? I don’t want to get into trouble if I all the sudden have all this gold. Also, where would I sell it? The reason I ask, is I was thinking about buying actual gold as an investment. Do I have to keep a receipt for what I bought it for? Does anyone know about rules for buying or selling gold in Illinois or where I can find them? Thanks

financi4 answers:

In the U.S., you only have to pay taxes on REALIZED investment gains, not unrealized gains. So if you bought and held 1 gold bar for 10 years, at the end of 10 years you may have unrealized gains because the gold will have presumably increased in value. However, you will not have realized gains until you sell the gold bar to someone else. That’s when the taxes will be due. You want to keep your receipt because that will be used to measure your gains.

You buy and sell gold at a gold dealer, usually someone who has a big business trading in gold, silver and/or diamonds.

Gold is a very good investment right now. Good luck!

Paul asks…

What do you think of investing in gold and silver now at these very high prices?

And .. what do you think is a better investment.. gold or silver?

financi4 answers:

They may be the highest prices they’ve ever been, but I have to go with Peter Schiff on this, and recommend buying it while it’s still this cheap!

Personally, I favor silver, preferably in smaller denominations. Mainly because it’s more liquid and can be used for purchases like food or other needs in a “shit hit the fan” type of world like we’re headed towards. Gold is actually too dense of a store of value anymore unless you’re trying to buy something like a car or boat with it.

Joseph asks…

Is it right time to invest in Equity/Gold or Silver?

Will there be a market crash in a month or 2?

financi4 answers:

Yes it is

Donald asks…

I want to invest in gold and/or silver coins.?

Which is better to invest in? And what are the names of the coins in should ivest in? Someone told me to go with silver becouse the price of gold was to inflated. Thank for the help.

financi4 answers:

One doesn’t really “invest” in gold; rather, you allocate some of your funds to precious metals, typically no more than 10%, as a hedge against the corruption of a paper currency.

With gold already high at $920, there’s every reason it can continue to go higher as long as the Fed and Bush/Congress continue to inflate the Dollar by lowering interest rates and “stimulating the economy”, with extra tax refund checks.

The reason many suggest silver over gold is the factor of the gold/silver ratio, which is now about 54, rather than the historical range of 15-20, meaning that silver is supposed to be undervalued vs. Gold. So if you conclude that the ratio should be going down, you would have more upside potential in buying silver now.

While the 1801 stat that Golda mentioned might indeed be true, the question is, who has lived 200+ years to have been able to take advantage of that? And who can say for sure that the Dollar won’t totally collapse this time around? While i also see it as highly unlikely, if all my other paper investments were to vanish, i do expect my 10+% in precious metals to carry me through.

And as for an example of the bullion coins i buy, Krugerrands for gold, and Canadian Maple Leafs (and American Silver Eagles to a lesser extent) for silver. Krugerrands have no face value, while ASE’s have a face value of US$1 and CML’s a face value of C$5. Although silver is silver, i do prefer the Canadians for the higher face value, even if i don’t know if there will be any practical difference between them if and when the time comes…

John asks…

How to start a gold/silver/rare coin investment firm?

I really want to start a gold investment firm and i’ve been reading up a bit on investment firms and their regulations and stuff, but I don’t know how much of it affects me or if there are different thigns I need to know if i’m going to be buying and storing gold verses investing in the stock market. Any advice would be great!

financi4 answers:

It is a different matter entirely, especially if you want to include coins. Both collectible and investment grade coins are complicated subject in themselves. I would suggest first finding a job at a place like that, just to learn the ropes, and only then think about own place.

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Your Questions About Stocks And Bonds Basics

George asks…

HELP! 401k enrollement?

At my job, i have been told i need to do my 401K enrollement.. the only thing is.. i have no idea what i should invest in. what percentage should go where… Please help me by telling me the basics of the 401k and how it applies to my life…

I am a college student, and am not dumb or anything like that. I understand that I am going to need my 401k and that it rolls over… I just do not know anything else about 401k/ investments

Can you help break it down for me…

BY THE WAY.. I am being asked to set of investments for future contributions. What percentage should i choose for each

Short-Term Fixed Income Fund 0% %
Stable Value Fund 0% %
Government Inflation-Protected Bond Fund 0% %
Core Bond Fund 0% %
Intermediate Bond Fund 0% %
High Yield Bond Fund 0% %
Large Cap Value Index Fund 0% %
Large Cap Value Fund 0% %
Growth and Income Fund 0% %
S&P 500 Index Fund 0% %
Large Cap Growth Index Fund 0% %
Large Cap Growth Fund 0% %
Mid Cap Value Fund 0% %
Mid Cap Growth Fund 0% %
Small Cap Index Fund 0% %
Small Cap Core Fund 0% %
Small Cap Blend Fund 0% %
International Large Cap Value Fund 0% %
International Large Cap Index Fund 0% %
International Large Cap Core Fund 0% %
International Small Cap Fund 0% %
JPMorgan Chase Common Stock Fund 0% %
Moderately Conservative Portfolio 0% %
Moderately Aggressive Portfolio 0% %
Aggressive Portfolio 0% %

financi4 answers:

You need to talk to your HR department. It also might make sense to read a financial book or two. You need to get a sense of your own tolerance for risk and then try to match investments to that and at the same time make sure you’re well diversified. You’re not going to get that all here on YA!You need to do some homework. This is your money not ours.

John asks…

How to invest in stocks?

I’m 23 years old and I have no idea what to do with my money, I work and put it on the bank.. and that’s pretty much it. I’d like to invest in stocks or bonds or whatever…

Anyway can you please educate how to invest in the stock market?

I know the basics, like if I buy a share that’s 0.5 and next day it’s 500,.. I’m like rich Lol. But that’s pretty much it, when in terms of stocks lol

financi4 answers:

I believe in using professional market timing systems. Some believe attempting any market timing is a mistake – but that philosophy originated with the endless bull market of the 90’s, when leaving money out of the market for any length of time seemed risky.
The market today is quite different – the odds of losing money is just as great (or greater) than the odds of making money. Without some market timing it could take many years to reach even modest investment goals. In fact nearly all professional investors do market timing – this is why a majority of stock trading is now done by automatic computerized systems.
Dollar cost averaging (a very popular strategy) is a very mild form of market timing – because it automatically causes you to buy more stock when prices are low. Other ways (like technical analysis of charts) are more difficult and risky, but there are also middle roads to take.
Professional timing systems are usually sold as services, and can be very expensive. Review sites (like independently test and rate their performance.
There are however a few timing systems that are free (see sources), and a good fit for a beginning investor – both the services listed below require very few trades to be made (once or twice per year) and can be used on mutual funds, even those held inside retirement accounts.

Richard asks…

Where can I buy Stocks and Shares in Person?

Hello, I’m almost graduating High school and going to college soon. I wan’t to know if any of you know where I can Buy & Sell Stocks, Buy Corporate Bonds, Government Bonds Etc… In Person, I tried to google it buy I could only find out Websites. I’m planning on start buying in about one months or two. Till then I’m going to read some books to learn the basics.

Or if there aren’t any places where I can Buy them in person, Then what is a Good, Trust worthy website.

I Live in San Diego.

Thank you.

financi4 answers:

Based on the wording of your question, you will need more than a month (or two) to learn the basics of the investment markets.

Not sure what you mean by “in person” You can walk into any brokerage firm, fill out a new account form in person, talk to a sales rep in person, deposit money into your account and give the sale rep an order to buy whatever you want to buy.

All major firms permit their customers to buy and sell securities using the firm’s website.

All securities that trade in the US markets must be bought/sold through a registered broker/dealer so you have your coice – visit a brokerage firm in person and enter orders, call a brokerage firm and sepak with a sales representative, or go on line and use a webiste that is available to customers of all broker/dealers.

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Your Questions About Stocks And Bonds 2012

Steven asks…

First Time Filing Independent Contractor – Further Help Desired?

A few days ago, I posted a question regarding my first-time filing of Estimated Self-Employment taxes. I received several great answers, but they didn’t really agree with one another.

To sum up:
1.I am 23 years old, and my parents will claim me as a dependent on their April 2012 tax filing for this year. I am single, and have no children.

2.I was hired on as an intern for the company I work for, this 3rd quarter, and they have classified me as an independent contractor, per my contract (see quote below).

–>”It is agreed and understood that INTERN is an independent contractor/consultant and that
neither party can assign the Agreement. INTERN will not be eligible for any employee
benefits from COMPANY and COMPANY will make no deductions or payments for
taxes, insurance, bonds or other sums.

INTERN understands and agrees that he/she is not entitled to unemployment
compensation upon termination of his/her relationship with COMPANY. INTERN
further agrees not to seek or file for unemployment with COMPANY.”

3.My contract ends here at the end of September, and I have received $4,900 in income from the company, for the 3rd quarter. During this same quarter, I received $200 in wages from another employer, who did take out Fed, State, Medicare, and SS taxes. – This totals 5,100.

4.As my contract ends, it is a great possibility they will hire me on, as an employee, so this is likely to be my first, and only filing of Self Employment Estimated Taxes for the year. I do not see the need to get a ruling on my employment status – as yes, I know, I am technically not an independent contractor – because, like I said, this will likely be my only filing. I believe this means I should be responsible for both my own taxes, as well as what my employer would have been responsible for.

5.I meet the standard deduction of $5,800.

6.I have no exemptions as I am not blind, handicap, Native American, in the military, etc.

7.I have no withholdings, no earned income credit, additional tax credit, fuel tax credit, refundable American opportunity credit, or other refundable credits.

8.I have had no other income for the entire 2011 year, including income from bonds, the stock market, etc.

9.I did not owe any taxes last year, and received $100 back from the Fed and State, combined.

Answers I received from Initial Posting:
1. “The Tax Lady” gave me some nice calculations, but she used $9,400 instead of $4,900. She suggested I file form SS-8 with the IRS to get my employment status re-classified. As I stated above, I am not sure I wish to do this, as this will likely be my only filing. I also do not wish to get my employer in trouble, especially if they are in the process of considering hiring me on.

2. I received was a calculator from “Bobbie” at According to this, I would owe $602, but I feel like this does not include what my employer should have been responsible for. This is based on the 1040ES Form.

3. “Max Hoopla” agrees I should submit the SS-8, but also that I report my wages on Form 8919 instead of Form 1040ES, so I only have to pay half.

4. “Tro” asks if I receive a 1099 on the intern pay. I do not receive this. He asks if I am 25, because I would be eligible for the EIC with the wages, but I am only 23. He says I should use the “Net” amount on Schedule C for the 1040ES, but I do not have any business expenses, so my “net” would be exactly what I earned this quarter.

To these users that answered, I really appreciate your help! However, can anyone take this information, and better clarify what I should do? I still feel lost, and I am hesitant to go to H&R block, for example, to get help… I don’t want to have to pay a hefty fee for this if my required tax payment is small to begin with. THANK YOU!!!!
YOU ALL ARE SO AWESOME!! THANK YOU 🙂 – I wish I could give you all “Best Answer” ratings…

financi4 answers:

Read up on self employment schedule C & SE
Read the forms and the instructions
Your company SHOULD in fact issue you a 1099 since they are treating you as an independent contractor, but whether they do or not you are required to file a return and report the income
AND you will owe the self employment taxes EVEN if you don’t owe federal or state income taxes (less than 15%)
You don’t state that you were/are a full time student for at least 5 months of the year–IF you are NOT, your parents CANNOT claim you as you made too much money–if you were/are, they can take you as a dependent
If you are working for the rest of the year, for w-2, you can have EXTRA withholding, and avoid paying quarterly estimated taxes. . . . .and as this is your first (and perhaps only) self employment filing, you may escape serious penalties and interest; but you should consider a 3rd or 4th quarter estimated quarterly tax payment

Donald asks…

What is still considered a safe investment vehicle in today’s market, considering a possible recession?

I looked at all possible investment possibilities, known to me:

in my opinion the upcoming weeks will be crucial, determining, if the rally will continue until 2012, where I believe we will then see a bear market the next years, reducing the S&P to below 2009 standards. Or, it will start next months. In any way, a long rally with the prospect of breaking down any time will not make me sleep well at night and even though the S&P will not go from 124 to 50% overnight, but over the next years, makes think, if there are stocks out there which are really a rock in water, moving slightly in booming and in recession times. In my opinion, not, but I am curious to hear thoughts.

Hedge Funds:
They sound a “safe” investment to me. However, I heard and read several times that they are not really safe either. Why that is I do not know. The idea of a hedge fund is to hedge risks, even in recession times.

In financial classes I learned having a diversified portfolio, serves to capital preservation. However, are bonds still a save investment with all the governmental debts coming finally to haunt them? With Ireland defaulting, next Greece, Italy, probably soon upcoming Spain, Germany and France already stating that they are being affected, in major cases probably even the countries overseas in the west, and Asia. If I were to pick bonds, I would pick any bonds of a country with a low debt to gdp ratio. In the 1st sense, I am looking to not loose any more money, as I had before September this year, where I had the majority of my investments in stocks; making money is the next on the horizon and another thing itself, which I do not want to be addressed.
Looking for bonds, adjusted for inflation, I also curious to hear ideas. Perhaps, those from Lichtenstein and China seem reasonable to me:
If the data is right Lichtenstein in deed has no debt at all, whereas China looking ok, being the coming economic powerhouse having only 5% debt of GDP; still, I do not trust communist statistics, where their grass is always green.

I live in Europe. The currency could break down, or it could not. I do not know, and we will find out. I was thinking about changing some euro into US dollars. However, the prospect of the US having immense debt of 15 billion, is not looking nice. So I looked at countries with low debt. Lichtenstein, Cayman Islands, Kuwait with about 50% debt to gdp, but the strongest currency in the world. Lichtenstein, would fall out, because it’s currency is pegged to the Swiss Franc, with Switzerland having a very high debt to dgp ratio, too. Now Cayman’s Dollar and Kuwait are next. Kuwait keeps it currency naturally high, what will happen to the currency in a global economy I don’t know. But I had a look at three graphs: EUR to USD, KYD, KWD, the last 3 all having the same trend overall the past years. So choosing a save currency is hard and I am curious about opinions.

Real estate:
Housing/real estate market crisis fresh from 2009.. How hard it will be affected in a recession I do not know. Still I would not go about to buy an apartment or land, only because a recession is on the run the next years, also considering real este is not very liquid.

Another investment vehicle I learned in school, and I was told to be used in times of high inflation and recession. It seems to me Gold is no longer the save heaven it used to be, same with bonds overall, with countries defaulting. The point here is though, I heard several times, Gold is a bubble, overpriced, and me finally looking at the graphs and indicators, I could see where it has reason to drop 42 points (GLD) the next couple months, and even lower to the point of 4 years ago. The thing is this though, if we continue the rally, Gold might appreciate due to increased fears of a recession, or go with the flow of the S&P 500; or people could start selling Gold due to it being overpriced. If we were to begin the recession it would seem only likely that gold would increase in price, or it could decrease, too, due to being overpriced.

In my opinion options and Futures are an investment vehicle of speculation and my intention in this post is not to speculate but to invest, meaning finding things I do not have to worry about for a year or two.

Overall I think Hedge funds, and bonds seems a save bet to me. I am very curious of the comments, and opinions of other’s.

financi4 answers:

The best opportunities are now in european stocks right now, they have been hammered by politics and debt problem but they are still good companies over there and they still making money.

Hedge funds:
They are still good for diversification purposes even if in general the performance is less than 10/20 years ago. You have a lot of risk with hedge funds since they are still less regulated than mutual funds (you have more operational risk, strategies drift risk, ponzi stuff…). Even if it is more difficult to invest in hedge funds for an individual investor (not qualified), you can still do it through ETFs.

It is true that because of gov debts, gov bonds are less secure even triple AAA (look at the Germany and France). Furthermore the interest are very low for the moment, as soon as they rise you will loose money on your bonds portfolio.
I won’t in Lichtenstein even if it has no debt, it is a very small country and even a small problem can rip out this country (look at Ireland with it’s banking system)

It is really complicated making money long term with currencies. Why there are so few currency fund worldwide? Because even professional can make money long term on Forex.

Gold is an insurance. But right now the price for insurance is way to high because of the bubble.

It is mainly use for speculation but you can use them to also hedge your portfolio. You are right it is only for short term purposes.

Ken asks…

Your NEO (BHO) is speeding things up!?

Prediction one. The twenty-five-year equities bubble pops in 2009. U.S. and foreign equities markets will stop treading water and realign with economic reality. Stock prices will cease to reflect the “greater fool” mentality and will return to being a function of dividend yields, which have long been miserable. The S&P 500 will sink below 500. In a bid to stem the panic, the government will enforce periodic “stock market holidays”, and will vastly expand the scope of its short-selling prohibitions—eventually banning short-selling altogether.

Prediction two. With public pension systems and tens of millions of 401k holders virtually wiped out—and with the Baby Boomers retiring en masse—there will be tremendous pressure on the government to get into the stock market in order to bid up prices.

Therefore, sometime in 2010, the Federal Reserve will create and loan out hundreds of billions of fresh dollars to the usual well-connected suspects, instructing them to buy up stocks on the public’s behalf. This scheme will have a fancy but meaningless name—something like the “Taxpayer Assurance Equities Facility”. It will have no effect other than to serve as buyer of last resort for capitulating smart-money types who want to get out of stocks entirely.

Prediction three. Millions of new retirees—including white-collar people with high expectations for a Golden Retirement—will be left virtually penniless. Thousands will starve or freeze to death in their own homes. Hundreds of thousands will find themselves evicted and homeless, or will have to move in with their less-than-enthusiastic children. Already strained by the rising tide of the working-age unemployed, state and local welfare services will be overwhelmed, and by 2012 will have largely collapsed and ceased to function in many parts of the country.

Prediction four. “Quantitative easing” will fail to restart previous patterns of lending and consumption. As the government sends out additional “rebate” checks and takes ever-more drastic measures to force banks to lend, hyperinflation could take hold. However, comprehensive debt relief via a devaluation of the dollar is even more likely. This would entail the government issuing one “new” dollar for some greater number of “old” dollars—thus reducing both debts and savings simultaneously. This would make for a clean slate a la Fight Club.

As there are many more debtors than savers in the U.S., the vast majority would support devaluation. The Chinese and other foreign holders of our bonds would be screaming mad, but unable to do anything. Every country that has not found a way out of dollar-denominated reserve assets by 2012 will see its reserves eliminated.

Prediction five. The government will stop pretending that it can finance continuous multi-trillion-dollar deficits on the private market. By late 2010, the sole buyers of new U.S. Treasury and agency bonds will be the Federal Reserve and a few derelict financial institutions under government control. This may or may not lead to hyperinflation. (See prediction four).

Prediction six. As the need for financial industry paper-pushers declines and people have less money to spend on lawyers and Starbucks (SBUX), unemployment will rise until the private sector has eliminated all of its excess capacity and superfluous or socially needless jobs. The government’s narrow unemployment figure (U3) will rise into the high teens by late 2010. The government’s broader unemployment figure (U6) will cease to be reported when it reaches 25 percent—it will simply be too embarrassing. Ultimately, one in three work-eligible Americans will be unemployed, underemployed, or never-employed (e.g. college grads permanently unable to find suitable work).

Prediction seven. With their pension dreams squashed, and their salaries frozen or cut, police and other local government workers will turn to wholesale corruption in order to survive.

Article on Seeking Alpha


I hate to be a downer, but how on earth are we ever going to get out of the national debt. BHO added ~$2trillion this year. That is four times Bush’s worst deficit.

He isn’t NEO. He isn’t the one. He is speeding up the demise of the USA. Is it in the name of reparation?

This is NOT hope or change it is more of the same with a greater magnitude.

financi4 answers:

It’s too late for that, start stocking up on SPAM and condensed milk

Charles asks…

can some one summarize this article? “US economy in transition from recovery to expansion phase”?

Stocks advanced yet again last week in light of rising optimism about economic growth, strong corporate earnings and a continued fading of the fears that kept many investors away from risk assets over the past couple of years. For the week, the Dow Jones Industrial Average climbed 1.5% to 12,273, the S&P 500 Index rose 1.4% to 1,329 and the Nasdaq Composite advanced 1.5% to 2,809.

In our view, while the rally has been strong, it is not yet exhausted. Although a short-term correction could take place at any time, equities remain relatively inexpensive and we believe the bull market should continue.

Economic growth in the United States has continued to improve in recent weeks. Business confidence measures have moved to multi-year highs, sales levels are rising, profits are improving and business investment levels remain robust.

The economy is clearly transitioning from a recovery phase to an expansion phase. The difference between the two is that the former is dependent on monetary and fiscal stimulus while the latter is based on improvements in demand from the consumer sector as well as on companies’ top-line growth and growing trends in capital investment — trends that are more self-sustaining.

It is important to remember, however, that the significant long-term issues that drove the economy into recession (the fiscal crisis and resultant deleveraging) have not gone away and will still take some time to address. It is clear that the launch of QE2 in late 2010 as well as the extension of the Bush-era tax cuts (plus additional sweeteners) has helped lift near-term economic prospects, but what happens in the second half of the year and beyond remains an open question.

The murkiness of the long-term outlook combined with the fact that economic growth expectations have improved result in some additional risks. At present, expectations for 2011 economic growth have risen to around the 3.5% level, meaning that it will be an increasing challenge for data releases to result in positive surprises.

It is extremely difficult at this point to make any sort of assessment as to what the economy will look like in 2012, but we expect 2012 to be a year marked by a Federal Reserve that is slowly working to normalize rates, by emerging economies that are continuing to experience faster growth levels than the rest of the world, by a political backdrop that will make President Obama eager to promote growth-friendly policies and possibly by a housing market that is able to make some contributions to economic growth levels.

One factor that we do not believe will be a significant issue in the year ahead is inflation. Rising food and energy prices have received their share of headlines, and while these factors are highly significant in emerging economies (where purchases of food and energy make up a much larger percentage of consumer spending), they are less so in the developed world. There is still a great deal of slack in the world’s developed market economies (which can be seen in the labor markets), and we do not believe we need to be overly concerned about inflation.

Given the improving economic backdrop, it should not be a surprise that we are seeing a broad asset allocation shift among investors from bonds toward equities. Some observers have suggested that the recent inflows into equity mutual funds mean that the rally in stocks may be coming to an end, but we do not share that view and continue to believe that equities are a good place for most investors to be.

From a geographic perspective, we continue to believe that US stocks are very well positioned relative to alternatives. US economic growth is continuing to improve, while Japan and Europe are continuing to face some problems. Emerging markets do represent some attractive opportunities, but in some cases (such as China) growth levels are too high and inflation is becoming a problem, causing authorities to ramp up tightening efforts.

For many investors, the shift into equity markets is still in the early stages and equity valuations are hardly stretched, suggesting that the upward moves have further to run. While pullbacks and corrections will no doubt occur along the way, we believe they should be short and shallow and should be taken advantage of to add to positions.

financi4 answers:

I’ll summarize it for you…

It’s all lies. There is no recovery.

After the treason of “globalism” became accepted, all traditional financial rules and indicators mean nothing. This recession was CAUSED by the big corporations making more money using foreign slave labor. The health of these corporations is no longer an indication of the nation’s general economic health. Actually, the opposite is more likely. This crash started at the consumer end. The rich got richer and the poor could no longer afford to pay their debts. NOTHING HAS CHANGED. Get ready for round 2.

There is little growth now and no reason to expect any. Stock prices are being held up by “bailout” money stolen from taxpayers and the expectation of inflation. The stocks will simply be worth more devalued dollars, even though there is little growth because consumers still can’t get good paying jobs like they could in the past. NOTHING HAS CHANGED. What caused the first part of the recession will continue to cause more problems. Basically, the parasite has killed the host and workers can no longer support a growth economy due to “globalism” and slave labor.

The “elite” have consolidated the world’s wealth and they are not going to give it back. They will use each crisis they caused to take more control and more of our freedoms in order to “rescue” us. The control they already have over “our” government is pretty plain to see. Everything is being done AGAINST the will of the people and MANY unconstitutional things are being done. By some strange coincidence, a police state is also being built at this time to protect us from “terrorists”. Let me tell you… The “terrorists” they are getting ready to control are you and me when we’re even more broke and pissed off. The timing is no coincidence and building 7 did not implode in it’s own footprint from small fires.

There is also still a GIANT BLACK HOLE of worthless derivatives held and traded by the banks. The truth is, they are all insolvent and they will continue to find more ways to steal from us and try to fill the black hole. There will be more bailouts, schemes for selling “carbon credits”, etc…

The price of gold is just $2.00 off the all-time high at this moment. This is no sign of recovery! This is a sign of a world in financial turmoil, where all currencies are losing value in unison (intentionally to make it less noticeable).

If you want to hear more truth, I suggest you hit YouTube and listen to anything Max Keiser has to say…

Richard asks…



I am working on a 100 question test and I am stumped on the following 8 questions … can someone please help me answer them so I can research and see how you got the answer, trial by error?

On May 1, 2011, Stanton Company purchased $50,000 of Harris Company’s 12% bonds at 100 plus accrued interest of $2,000. On June 30, 2011, Stanton received its first semiannual interest. On February 1, 2012, Stanton sold $40,000 of the bonds at 103 plus accrued interest.
Blanton Corporation purchased 35% of the outstanding shares of common stock of Worton Corporation as a long-term investment. Subsequently, Worton Corporation reported net income and declared and paid cash dividends. What journal entry would Blanton Corporation use to record the dividends it receives from Worton Corporation?

A) debit Investment in Worton Corporation; credit Cash
B) debit Cash; credit Investment in Worton Corporation
C) debit Cash; credit Dividend Revenue
D ) debit Investment in Worton Corporation; credit Income of Worton Corporation

– – –

On May 1, 2011, Stanton Company purchased $50,000 of Harris Company’s 12% bonds at 100 plus accrued interest of $2,000. On June 30, 2011, Stanton received its first semiannual interest. On February 1, 2012, Stanton sold $40,000 of the bonds at 103 plus accrued interest.
The equity method of accounting for investments

A) requires the investment be increased by the dividends paid by the investee
B) requires the investment be increased by the reported net income of the investee
C) requires the investment to be reported at its original cost
D) requires a year-end adjustment to revalue the stock to lower of cost or market

– – –

Ruben Company purchased $100,000 of Evans Company bonds at 100 plus $1,500 in accrued interest. The bond interest rate is 8% and interest is paid semi-annually. The journal entry to record the receipt of interest on the next interest payment date would be:

A) Debit: Cash $4,000; Credit: Interest Receivable $4,000
B) Debit: Cash $2,500; Credit: Interest Revenue $2,500
C) Debit: Cash $4,000; Credit: Interest Receivable $1,500 and Interest Revenue $2,500
D) Debit: Cash $4,000; Credit: Interest Revenue $4,000

– – –

On May 1, 2011, Stanton Company purchased $50,000 of Harris Company’s 12% bonds at 100 plus accrued interest of $2,000. On June 30, 2011, Stanton received its first semiannual interest. On February 1, 2012, Stanton sold $40,000 of the bonds at 103 plus accrued interest.
For accounting purposes, the method used to account for investments in common stock is determined by

A) whether the acquisition of the stock by the investor was “friendly” or “hostile.”
B) the amount paid for the stock by the investor.
C) the extent of an investor’s influence over the operating and financial affairs of the investee.
D) whether the stock has paid dividends in past years.

– – –

On May 1, 2011, Stanton Company purchased $50,000 of Harris Company’s 12% bonds at 100 plus accrued interest of $2,000. On June 30, 2011, Stanton received its first semiannual interest. On February 1, 2012, Stanton sold $40,000 of the bonds at 103 plus accrued interest.
The journal entry Stanton will record on February 1, 2012, will include:

A) a debit to Cash for $41,200.
B) a credit to Interest Receivable for $500.
C) a credit to Gain on Sale of Investments for $1,200.
D) a credit to Interest Revenue for $1,200.

– – –

Jarvis Corporation makes an investment in 100 shares of Saxton Company’s common stock. The stock is purchased for $40 a share plus brokerage fees of $300. The entry for the purchase is:

Stock Investments – Saxton Company = 4,000
Brokerage Fee Expense = 300
Cash = 4,300

Stock Investments – Saxton Company = 4,300
Cash = 4,300

Stock Investments – Saxton Company = 4,000
Cash = 4,000

Cash = 4,000
Stock Investments – Saxton Company = 4,000

– – –

On May 1, 2011, Stanton Company purchased $50,000 of Harris Company’s 12% bonds at 100 plus accrued interest of $2,000. On June 30, 2011, Stanton received its first semiannual interest. On February 1, 2012, Stanton sold $40,000 of the bonds at 103 plus accrued interest.
What are the total proceeds from the February 1, 2012 sale?

A) $41,700
B) $40,600
C) $42,000
D) $41,600

– – –

On May 1, 2011, Stanton Company purchased $50,000 of Harris Company’s 12% bonds at 100 plus accrued interest of $2,000. On June 30, 2011, Stanton received its first semiannual interest. On February 1, 2012, Stanton sold $40,000 of the bonds at 103 plus accrued interest.
The journal entry Stanton will record on June 30, 2011, will include:

A) a debit to Cash for $3,000.
B) a credit to Interest Revenue for $2,000.
C) a credit to Interest Receivable for $1,000.
D) a debit to Cash for $2,000.
It has been brought to my attention that I should have broken these up for points purposes … I have never used this before, so i was not aware of how the points worked … Please bare with me this time around … in the future I will break up questions into “bite sizes” …

financi4 answers:

You should break up your question into bite-size ones. It’s not fair for one person to have to answer all 8 just for 2 points

Joseph asks…

Lib Logic: No payback from Solyndra means payback in full, right?

Solyndra’s bankruptcy assets sold for less than 1% of all loans (government and private), why are libs saying the loan was repaid?

The government has yet to see a dime in payback, and most likely wont because other investors have priority over the government picking from the final assets.

This is an example of the lib comments on Solyndra Payback:
Amazingly (For the first time ever seen by the Treasury Dept) This company paid back people in this order.
Investors !
Bond holders
Stock holders
Nice Job Obama

financi4 answers:

Because liberals live in a world of lies, delusions, hypcrisy, and outright denial of the obvious.

Thomas asks…

Here is a comparative balance sheet for Matsui Company: accounting homework?

I need help with my accounting homework!!!! anyone???

Here is a comparative balance sheet for Matsui Company:

Comparative Balance Sheet
December 31

Cash$68,000 $22,000
Accounts receivable85,000 76,000
Inventories170,000 189,000
Land80,000 100,000
Equipment260,000 200,000
Accumulated Depreciation




Liabilities and Stockholders’ equity
Accounts payable$39,000 $47,000
Bonds payable150,000 200,000
Common stock ($1 par)216,000 174,000
Retained earnings




Additional information:

Net income for 2012 was $93,000.
Cash dividends of $35,000 were declared and paid.
Bonds payable amounting to $50,000 were redeemed for cash $50,000.
Common stock was issued for $42,000 cash.
No equipment was sold during 2012.
(a)Complete the statement of cash flows for 2012 using the indirect method. (If the amount reduces cash flow put either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45). List amounts from largest positive to smallest positive followed by most negative to least negative, e.g. 15, 14, 10, -17, -5, -1.)

financi4 answers:

Operating Activities
93,000 Net Income
– 9,000 Increase in Account Receivable
+ 19,000 Decrease in Inventories
+ 34,000 Depreciation Expense
– 8,000 Decrease in Accounts Payable
129,000 Cash Flow from Operating Activities

Investing Activities
+20,000 Sale of Land
-60,000 Purchase of Equipment
-40,000 Cash Flow from Investing Activities

Financing Activities
-35,000 Dividends
-50,000 Bonds Redeemed
+42,000 Issued Common Stock
-43,000 Cash Flow from Investing Activities

129,000 – 40,000 – 43,000 = 46,000 Total Cash Flow
46,000 + 22,000 Beginning Cash Balance = $68,000 Ending Cash Balance

Chris asks…

Accounting: Problem 17-9?


Comparative Balance Sheets
December 31

Assets ————————————— 2012————– 2011
Cash —————————————- $102,700———- $33,400
Accounts receivable———————– 60,800————- 37,000
Inventory ————————————- 126,900———- 102,650
Investments ———————————- 79,500——— 107,000
Plant assets ——————————– 315,000 ——– 205,000
Accumulated depreciation ————- (44,500) ——– (40,000)
Total ———————————————– $ 640,400 —— $ 445,050

Liabilities and Stockholders’ Equity
Accounts Payable —————————-$ 57,700 ———-$ 48,280
Accrued expenses payable—————— 15,100 ————- 18,830
Bonds Payable ———————————- 145,000 ———— 70,000
Common Stock ——————————– 250,000 ———– 200,000
Retained earnings —————————— 172,600 ———– 107,940
Total ——————————————- $ 640,400 ———– $ 445,050


Income Statement
For the Year Ended December 31, 2012

Sales revenue$297,500
Gain on sale of plants assets 5,000

Cost of goods sold$ 99,460
Operating expenses, excluding
Depreciation expense 19,670
Depreciation expense 30,500
Income Taxes 37,270
Interest expense 2,940 189,840
Net income$112,660

Additional information:
1.New plant assets costing $146,000 were purchased for cash during the year.
2.Investments were sold at cost.
3.Plant assets costing $36,000 were sold for $15,000, resulting in a gain of $5,000.
4.A cash dividend of $48,000 was declared and paid during the year.


Prepare a statement of cash flows using the indirect method.

financi4 answers:

Using the template I gave you, just plug in the amounts for these items.

Net income $112,660
Depreciation expense 30,500
Accounts Payable —————————-$ 57,700 ———-$ 48,280
Accrued expenses payable —————— 15,100 ————- 18,830
Accounts receivable———————– 60,800————- 37,000
Inventory ————————————- 126,900 ———- 102,650
Common Stock ——————————– 250,000 ———– 200,000
Bonds Payable ———————————- 145,000 ———— 70,000

1. New plant assets costing $146,000 were purchased for cash during the year.
2. Investments were sold at cost.
3. Plant assets costing $36,000 were sold for $15,000, resulting in a gain of $5,000.
*Note: The gain is subtracted under operating activities.
4. A cash dividend of $48,000 was declared and paid during the year.

If you did it correctly, your cash flow should come out to the same as the increase in cash.
102,700 – 33,400 = 69,300

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