Hyundai is taking advantage of the economic downturn and competitor struggles by marketing a one-year, no hassle Hyundai Assurance.  If you buy or lease a new Hyundai and lose your job within the next 12 months, they’ll allow you to return the car where they’ll cover most or all of the difference.


It’s a brilliant marketing move that, along with their “America’s Best Warranty”, differentiates Hyundai from competitors.


Digging more into the details of the assurance, they only cover up to $7500. So assuming that people in danger of getting laid off don’t buy cars, this assurance won’t be too financially detrimental in the long run. Question is, will this work and will all the competitors follow?

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It’s amazing that this strip published almost 15 years ago and yet properly summarizes what’s happening in our economy today. CEO overpay, employee demands, bailouts, and company policy make their way into this classic comic strip from Bill Watterson. I think the only thing missing is the Susie character taking out an adjustable rate loan to actually buy the $15.00 lemon-aid. What a great, timely piece this has turned out to be. See the strip.

About Calvin and Hobbes:  One of my favorite comic strips as a kid.  I remember a friend introducing it to me, and looking forward to it every day as it made it’s run through the late 80’s and early 90’s.  I always found the writing, creativity, and ingenuity priceless.  

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Now that the stock market has dropped drastically over the last year, it’s actually a great time to buy. Remember this sage advice from the world’s most successful investor:

“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.” - Warren Buffett

Looking at today’s market, many people are fearful - that should trigger the time to be greedy. You would be hard pressed to find someone who’s confident in today’s market, or who’s not apprehensive about what the market is doing. Ironically that is the perfect time to buy. Prices are down, people are on the fence and afraid to buy, and that means bargains are a plenty.

But how does the average Joe go about buying stocks?  If one hasn’t invested in stocks before, where should they look?  The first thing you’ll want to do to be able to buy stocks, is to choose a brokerage. Here’s five, everyday brokerages that have easy interfaces, low fees, and even some great trend and charting features.

Here’s a review of 5 of the most popular online brokerages and banks:

E-Trade. A long time staple in online investing, I think almost everyone has seen one of their commercials. Although after I did some research and dug around their site, I realized it’s a lot of overkill. I found it difficult to find important information on their site quickly because it was cluttered, and offered way too many options for what I was looking for.

• The Good:
  • Lots and lots of account types, and features. Including savings, trading, and retirement.
  • International Trading
  • Great interest rate
• The Bad:
  • Simply too many features and options for me. Personally I like a bank to handle my checking and savings accounts, and a brokerage to handle stock trading.
  • Complicated pricing on stock trades. I hate trying to figure out how much my trades will be based on how many I do and how much assets I have. Just make it simple please.

Zecco. Kind of the new kid on the block - they focus on trading only, and offer 10 free trades per month. I like their philosophy, but wonder if they have lasting power.

• The Good
  • Easy and focused website. They only do trading accounts, so there is no overkill on various other types of accounts.
  • First 10 trades per month are free – as long as your account has at least $2500 balance.
  • Offers international trading.
• The Bad
  • Doesn’t offer other accounts, such as checking and savings, if you’re looking for that.
  • They’ve only been around for roughly 2 years, and might not have the experience or solidity of someone like E-trade or ING.

ING Direct (Sharebuilder). All things considered, sharebuilder is a great site, and ING is a great bank to work with. I have a lot of friends who use them for their online checking account.

• The Good:
  • ING offers many account types (checking, savings, retirement, etc) but separates it’s investing site into sharebuilder.com. I like the separation, it gives me the feeling when I go to sharebuilder, that I’m not bombarded with all kinds of accounts.
  • Offer a nice automatic investing program, for $4 dollars commission, you can buy stocks automatically each month. I like this because if you buy automatically, you 1) forget about it while you’re wealth grows. 2) the average cost per share goes down because you buy more shares when the price is low, and less shares when the price is high.
  • No Account minimums.
  • I like their site. It’s simple, and offers only the essential information without feeling cluttered and bloated.
• The Bad:
  • $9.95 cost per trade, which is expensive compared to zecco.com’s $0.

HSBC is also an online bank, that offers trading as well. They have been in business for a while, and have proved to have lasting power. Although because they are a complete online bank, I found that they offered more than what I wanted in terms of just investing. I found it hard to find what I was looking for, because there was simple so much information on their site.

• The Good:
  • Great savings accounts. I like online banks because they usually offer great rates on savings accounts. As of this writing HSBC offered 3.0% APR on it’s savings account.
• The Bad
  • Offers an “assisted” system for trading stocks. Their first step was to fill out a contact form, for an advisor to contact me. I’m looking for something more hands on, so this wasn’t what I was looking for.

TradeKing focuses on trading and stocks only. This I like. Their site is easy to navigate and offers a nice FAQ and community sections. I’ve read lots good reviews about them. Also they have received numerous awards (for customer service, and their website among other things). If you’re ok with the slightly higher commission than zecco, tradeking is the place to be.

• The Good:
  • Offered “Live Chat”. I love this, and think it’s great when websites utilize it. Of course there wait times, and lag to deal with but the fact that they offer it, I think is wonderful.
  • Offers a nice “community” section of their website, where you can compare, talk with, and befriend other investors. Great idea.
  • Cheap trades at $4.95 per trade.
• The Bad:
  • Online bank transfers take 5 days to clear, that’s in addition to the 5 days taken to verify your account when you first sign up. So you’ll have to be patient when you first sign up, and when making transfers.

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Photo by tacvbo

According to a report in the Wall Street Journal, AIG is in debt to Wall Street’s biggest firms to the tune of $10 Billion. The liability is due to speculative trades that have gone bad. Unfortunately the terms of the $150 Billion bailout made back in September didn’t cover the types of speculative trades that are causing this debt, leaving AIG again with their hand out asking for more money.

Even worse, the details of the trades seem to imply that AIG was not honest with the extent of its risk-taking actions when they made their appeal for help back in September.

“The soured trades and the amount lost on them haven’t been explicitly detailed before. In a recent quarterly filing, AIG does note exposure to speculative bets without going into detail. An AIG spokesman characterizes the trades not as speculative bets but as ‘credit protection instruments.’”

So let’s recap the extent of AIG’s attempts at bending the truth and wasting money:

• October 1st: Held weeklong retreat at luxurious $1,000 a night resort in Monarch Beach California.
• November 3rd: Held secret outing at resort in Arizona, hidden logos and signs.
• November 26th: Quietly announced they would be giving out ‘cash awards’ to 130 managers, including $3 million to retirement services chief Jay Wintrob.

And now

• December 10th: Realized they owe $10 billion because of risky investments that went bad, and weren’t discussed in their initial plea for government funds.

Time will tell what dishonest, money-wasting scheme they will come up with next.

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Congress announced this week they are inching closer to making a deal with the Ford, GM and Chrysler companies to provide financial aid to keep them afloat until early 2009. I bet if they made good cars and consistently kept their expenses below their earnings, they might actually be able to survive on their own. Whatever happened to good old-fashioned capitalism and having to make money to stay in business? Did Ford, GM, and Chrysler just now figure out that they haven’t been turning a profit in years?

Here are some numbers I pulled directly from Google finance which show the stark contrast between failing companies and healthy ones. Even though the numbers are in Japanese Yen, Dollars and Indian Rupees, the important factor is the obvious negative net income vs. positive net income. (Numbers are in Millions)

And this doesn’t even show the 2008 numbers, which undoubtably will be even worse. Unfortunately jobs will be lost, but why reward a business that is failing? Why waist money on a business that has operated at a consistent loss for 3-4 years.

Their claim is that too many jobs would be lost, and the after shock of that would be “catastrophic” for the US economy. But what about this:

• Honda reports it’s plant in Anna Ohio is doing fine, it even underwent a $75,000, 135,000 square foot expansion.
• Toyota opened its second R&D campus in October 2008, in York Township, Michigan.
• BMW has over 200 suppliers in North America. Toyota has roughly 500 major suppliers in North America.

The U.S. is really good at a lot of stuff: technology, innovation, entertainment, and design to name a few - but sorry, currently they just can’t make cars. Yes, I did say currently. Who knows what a stiff kick in the butt (going out of business and massive job loss) might do?

Here’s some simple yet hard advise: if you want to stay in business you have to make money, otherwise you have no business being in business. Take it from someone who knows a little about making money:

 “Sales minus costs equals profit. Is there more?” – Bill Gates

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Photo by Manuel Van De Weijer

“It’s a recession when your neighbor loses his job; it’s a depression when you lose yours.” Harry S Truman (1884 – 1972), in Observer, April 13, 1958

During these apprehensive financial times, there is one thing that stands clearly as the most important factor in your current economic success: your job. For most of us, this is undoubtedly our main source of income, and our main lifeline to be able to save, invest, pay our mortgage, send our kids to college, etc.

Having a job is obviously an important part of life, but these days it’s absolutely critical. With the falling stock market, and real estate market, those who make a large portion of income from investments may now find that their job is the most important part of their portfolio. That’s why it’s important to make sure our job and position remain firm. Here are some tips I’ve gathered to just that end. Making sure we do everything we can to make our employment as solid as possible.

1. Make yourself part of the moneymaking. This is the first and foremost way of making sure your job is bulletproof. One of the key factors is making sure you are in the middle of how your company makes money. If you’re not sure how your company makes money, find out. Then, put yourself right in the middle of it. Become part of the moneymaking process for them. This could involve sales, it could involve changing positions, it could involve some massive change on your part, but the bottom line is if you make money for your company, you have made yourself indispensible.

2. Be Seen. Even if you’re not in the office full time, or telecommute, you’ll want to do your best to make sure that the boss, and top people see you around as much as possible. Don’t hide in your office, or the kitchen. Make special trips to see others, to ask questions. Even if something could be handled with a phone call or email, make a special trip to see the person and ask face to face. You’ll probably see a couple people as you walk to their office, and see them as well. The point is you want your face to be very visible, and recognizable. “It’s harder for most bosses to lay off people they see every day than those who come in only now and then”, says John Challenger, CEO of outplacement firm Challenger Gray & Christmas.

3. Make those around you ( and above you ) look good. You’ll really get positive attention when you make those around you look good. Even if it doesn’t seem like you’re getting the attention, it will always eventually come back to you. Try to find out their needs, and foresee what problems they might face. If you can solve these problems before they arrive, or help them over come them, you’ll make yourself very important.

4. Networking. A lot of people have grown to hate this good old fashioned word, and for good reason. It sounds more like an event where you’re pushed into un-genuine relationships and schmoozing, then a pleasant form of friendship building. In his book “Never Eat Alone”, Keith Ferrazzi expels this myth, and denotes the importance of getting to know and enjoy people. The art of knowing people, and enjoying them is invaluable. Not only at the work place, but also in life in general. The more people you know, and have a good relationship with at work, the more solid your position will be. Try and make friends, and get to know people as much as possible. Use every opportunity you have to try and spark simple conversations.  Just get to know and enjoy those around you.

5. Be easy. You want to be considered easy to work with. Therefor you want to always have a discussion with people, not an argument. You want to always be thinking of how to make this interaction easy. Most often this involves more actual work, and can take some finesse to get it right. But it will always pay off. If you can be considered one of the easy people to work with, you’ll be priceless.

“You must understand that your job is your most valuable asset — and your primary objective is to protect it.” - Writer Stephen Viscusi

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Goldman Sachs is considering starting an online bank similar to that of Bank Of America, Citigroup, and ING. Now that GS is a bank-holding company, starting an online bank would allow them to take deposits and use them to fund various businesses.  And, with the very uncertain economic future of banks and financial institutions, GS would do themselves well to broaden their stroke to as much of the market as possible.  

The possible online bank hasn’t been named yet, and many details of its operating plans are undecided. It is likely to offer a range of savings products, such as certificates of deposit, people familiar with the matter said.

The possibility of GS starting an online bank shows the rapid change on Wall Street these days.  The company which once only did investments, now is seeking to broaden its range of products and its direct consumer interaction.

Goldman executives haven’t ruled out acquiring a bank with substantial retail operations, according to people familiar with the discussions. But the firm’s decision to seek a state banking license in New York is a sign that expanding across state lines is a low priority. Regulators approved the license last week.

Read the full article here.

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The NBER met via conference call on Friday, November 28th, and determined that the U.S. economy had peaked in December 2007, and since has been in recession. 

The Business Cycle Dating Committee of the National Bureau of Economic Research met by conference call on Friday, November 28. The committee maintains a chronology of the beginning and ending dates (months and quarters) of U.S. recessions. The committee determined that a peak in economic activity occurred in the U.S. economy in December 2007. The peak marks the end of the expansion that began in November 2001 and the beginning of a recession. The expansion lasted 73 months; the previous expansion of the 1990s lasted 120 months.

 

…

 

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators. A recession begins when the economy reaches a peak of activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion.

While most economists define recession as two consecutive quarters of declining Gross Domestic Product, the NBER’s definition of recession is more loosely based on their own chronological records of production, employment, income and other indicators.  They have determined that the U.S. Economy hit a peak in December 2007, and therefore have since been in a recession based on that peak.

Read the full NBER article here.

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The news this morning was inevitable, with credit card companies slashing credit lines by 45% over the next year and half.

Although on one side, it may be a good idea for the issuers to limit their risk and to help consumers from racking up even more debt. However, with so many people struggling, especially those who are unemployed, the credit reductions could be dangerous and lead to defaults.

Read the article.

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While I understand that managers, and especially money managers at big firms need to be paid, and paid based on performance, I’m sorry – but when your company, and your job, have basically been bought by the American tax payer, you’ve got a lot of accountability to stand up to. You’ve got to be very careful how you spend your money, and you’ve got to change your corporate culture to adhere to more prudent spending. And, above all, you’ve got to be honest with the people who “bought” your job. Unfortunately AIG has done none of this.

 
On Tuesday November 25th, AIG made an announcement that executives would not be receiving bonuses for 2008. They played a pretty song, claiming they would bypass bonuses because of the U.S. lead bailout.

“Chief Executive Edward Liddy will receive $1 in salary this year and next, and there will be no 2008 bonuses for the company’s seven most senior executives, the troubled insurance conglomerate said on Tuesday.” – reuters.

Interestingly enough, on the day before Thanksgiving, Bloomberg found that AIG reported it would in fact be giving “cash awards” to 130 of its managers.

American International Group Inc., the insurer that said yesterday it scrapped bonuses for top executives after a U.S. bailout, will still pay 130 managers ‘cash awards’ to stay with the firm, including $3 million to retirement services chief Jay Wintrob.

 
Wintrob, 51, will get the “retention” payment in two installments, the first in April 2009 and the rest a year later, New York-based AIG said today in a regulatory filing. The firm previously disclosed the program in a Sept. 26 filing and said today that Wintrob and Chief Financial Officer David Herzog elected to get the payments four months later than planned. 

 
‘The expectation from the public and Congress was that they weren’t getting bonuses, not that they’d be pushed off by several months,’ said David Schmidt, a consultant at executive pay firm James F. Reda & Associates. ‘That clearly violates the spirit of AIG saying they’ll forgo their bonuses.’ – Bloomberg.

Now, AIG chose to announce this the day before Thanksgiving, the day before a 4 day weekend for most, markets closed Thanksgiving day, obviously hoping this announcement might fly under the radar.

For executives who are lucky to have their jobs in the first place, this is not what I might hope from a troubled insurance firm. First, just be honest and open about your spending and your pay cuts. People will find out, transparency is the only possible policy. Second - take a hint. This isn’t the late 90’s. People are losing their homes, portfolios have plummeted, and workers have lost their jobs. The economy is in a crisis, can you not afford to forgo some of your $3 million dollar bonuses to help those who are actually paying for that bonus?

Reuters Report.

Bloomberg Report.

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