Highs and lows: 2000s brought good, bad and ugly business moves
Author: Angela Carter Date: December 27, 2009 Publication: New Haven Register Link to Article
As the first decade of the 21st Century ends, a whopping 50 percent of Americans have a negative impression of the past 10 years, compared with 27 percent who hold a positive view.
In a survey released this month, the Pew Research Center for the People & the Press found results “in stark contrast to the public’s recollection of other decades in the past half-century.”
When asked to look back on the 1960s, 1970s, 1980s and 1990s, positive feelings outweighed negative in all cases, researchers said, adding that passage of time may affect the way respondents view historical periods.
The 9/11 terrorist attacks were seen as the most important event of the decade, with the election of Barack Obama, the first African-American president, a distant second.
Is there an app for that?
Developments viewed favorably over the decade were dominated by advances in technology and communications.
Michael E. McGrath, author of the book “Business Decisions!” and executive chairman of the Thomas Group, has compiled a list of the 10 best and 10 worst business decisions of the decade. Topping his selections in the ‘best’ category are the advent of the Apple iPhone, iPod, iTunes and the many Apps, followed by the launch of Facebook, the popular social networking Internet site, and then Disney’s acquisition of Pixar.
Initially, computer maker Apple was criticized for leaping into unproven markets, McGrath said. “Now they’re doing about $12 billion a year on the iTunes and the iPhone,” he said. “It was really a bold move in a new direction.”
Clear majorities in the Pew survey saw cell phones, the Internet and e-mail as changes for the better, and most also viewed specific changes such as handheld Internet devices and online shopping as beneficial trends.
Handheld devices such as Blackberries and iPhones were seen as a good thing by 56 percent of participants while 25 percent said these inventions have been a change for the worse.
There was a greater division of opinion, however, over whether social networking Web sites or blogs have been changes for the better or changes for the worse.
“Technological productivity is the byproduct of this decade,” said wealth manager Paul Schatz, founder of Heritage Capital LLC in Woodbridge. “Financial products for the individual investor exploded. It gave institutional access to the individual investor.”
Among the memorable moments locally, Matthew Nemerson, president and chief executive officer of the Connecticut Technology Council, are a “restaurant renaissance” and the opening of IKEA in New Haven; the growth of casinos into East Coast destinations; the rise and fall of property investments for research and development by Bayer and Pfizer; and the moves to go public by Genaissance, Nuragen and Curagen, three biotechnology firms that were acquired by other or are in the process of being bought by other companies.
BOOMS and BUSTS
The decade was speckled with both bubbles of prosperity and high-profile, high-dollar cases of white collar crime that wiped out consumers, investors and workers by the billions.
And the worst of the worst? McGrath leads off with the AOL and Time Warner merger and then hits insurance behemoth AIG for expanding into the credit default swap business, which involves complicated transactions now tagged as contributors to the toppling of the nation’s financial system last fall.
“They undid the merger at the very end of the decade,” McGrath said of Internet service provider AOL and the media/entertainment conglomerate Time Warner. “At the time, they proclaimed there were a lot of benefits in merging the two companies. In the end, it turned out to be more fluff than substance.”
The combined value of the companies was estimated at $360 billion at the time of the 2001 deal. That has plummeted to less than $40 billion, he said. “They really destroyed shareholder value,” McGrath said.
Regarding AIG, it is currently believed the firm sold $500 billion in credit default swaps. “That was far more than they could ever pay back. That classifies as a bad decision,” he said.
Donald Klepper-Smith, chief economist and director of research for DataCore Partners LLC in New Haven and chairman of Gov. M. Jodi Rell’s Council of Economic Advisors, said states such as Connecticut lost income and sales tax revenue in the wake of the Wall Street collapse, which eliminated jobs and quelled consumer spending.
McGrath reserved the No. 3 spot for the dealings of New York financier Bernard Madoff, who pleaded guilty this year to 11 counts of securities fraud and other felonies and was sentenced to 150 years in the slammer.
The exposure of Madoff’s crimes, and the multi-billion losses suffered by his victims, led state Rep. Patricia Dillon, D-New Haven, to sponsor legislation authorizing stiffer penalties in Connecticut against money managers and financial advisors who commit fraud and the establishment of a fund that could provide some level of restitution to their bilked clients.
Rounding out McGrath’s "worst" list is the decision by accounting firm Arthur Andersen to shred tons of documents related to its client Enron, a former energy trading and utilities company.
Enron executives falsified financial statements and the gimmicks used to inflate revenue spun out of control, causing shareholders to lose nearly $11 billion while employees watched their jobs and pensions disappear. The fallout led to one of the biggest bankruptcy filings in American history.
The breadth and depth of discontent with the current decade is reflected in the words people use to describe it, Pew researchers found.
“The single most common word or phrase used to characterize the past 10 years is downhill, and other bleak terms such as ‘poor,’ ‘decline,’ ‘chaotic,’ ‘disaster,’ ‘scary,’ and ‘depressing’ are common. Other, more neutral, words like ‘change,’ ‘fair’ and ‘interesting’ also come up, and while the word ‘good’ is near the top of the list, there are few other positive words mentioned with any frequency,” the study said.
Schatz said there were multiple bubbles and busts over the decade involving the so-called dot.com frenzy over Internet startup companies and technology stocks, housing prices, mortgage derivatives, over-leveraged investment banks and commodities. “My one word for the decade: bust,” he said.
There was a recession after 9/11 and the current one began in December 2007. “Sadly, the memories of this decade investing-wise aren’t good ones. You’ve gone 10 years and you’ve actually lost money because of inflation,” Schatz said. “History in the market rhymes but it doesn’t repeat. Events aren’t exactly the same, but they’re similar.”
The Dow Jones industrial average reached its highest point of 14,198.10 on Oct. 11, 2007 and its lowest of 6,469.96 on March 6, 2009.
Better Days Ahead
Happy to put the 2000s behind them, most Americans are optimistic that the 2010s will be better, the Pew Center said. Nearly 60 percent say they think the next decade will be better than the last for the country as a whole, though 32 percent think things will be worse.
The Pew Research Center for the People & the Press is an independent opinion research group that studies attitudes toward the press, politics and public policy issues and is sponsored by The Pew Charitable Trusts.
Results for oyd survey were based on telephone interviews of 1,504 U.S. adults from Dec. 9-13.
Market unafraid of reform
Author: Rob Varnon Date: December 21, 2009 Publication: ConnPost.com Link to Article
Although dire predictions of death panels and radical changes in how you get health care might be scaring some Americans, the stock market is telling a different story about the legislation Congress is considering to expand health insurance coverage.
"The market is telling us that its not worried at all about any radical or substantive changes on health care reform," said Paul Schatz, president of the Woodbridge-based investment advisory Heritage Capital. Schatz said stock indices including the nation's largest health insurers, such as Aetna and Cigna, have risen by 50 percent since March, as has an index that measures the stock value of the largest pharmaceutical makers.
"They're outperforming tech and financial," Schatz said, adding that health insurers are outperforming energy and materials as well.
Basically, Schatz said the market is saying people can expect "business as usual" when it comes to health care. And several other experts in the state are using the same phrase about the situation.
The Senate this weekend lined up 60 votes to move forward on a health care reform bill, but its version now must be brought in line with the one being considered by the House of Representatives.
Schatz said overall, the plans are "certainly pro Connecticut economy."
In the version he's most acquainted with, Schatz said, insurance would be mandatory, which would only increase business for state-based companies.
Eric George, associate counsel for the Connecticut Business & Industry Association, also described health care reform as "business as usual," but with a more ominous meaning. The CBIA, with more than 10,000 members, is the state's largest business lobby. George is not as confident that what Congress is going to do won't harm the state's economy.
The House version has a public option, he said, and one of the biggest concerns is that the plan will be underfunded. There's also worry that the cost will be shifted onto private insurers, which will drive up premiums in that sector, forcing job reductions as a result.
George noted that in the House version, age-based premiums would be fixed, so an older worker would not pay more than double a younger person's premium. The fear is that the younger person's premium would jump 100 percent to save an older worker about 20 percent, he said.
George said the problem with the bill goes beyond the insurance and health fields, because any taxes raised would hamper businesses in all sectors.
"It just makes it that much more difficult to turn the lights on," he said, adding that the House bill isn't all bad. New record-keeping rules and other proposals could lower costs, he said.
Joseph McGee, vice president of public policy for The Business Council of Fairfield County, said he expects this legislation will do much to address the problems in health care.
Although it might increase employment in the health care sector as mandates kick in, McGee said it might also exacerbate the problem of rising costs that are crippling family budgets.
McGee, who worked in Washington, D.C., for nine years, was a banking executive and headed Connecticut's Department of Economic and Community Development, said politically it's difficult to declare a winner in this battle. He said the Obama administration looks as if it got worked over and has had to retreat on many fronts.
"There are some very good things in the bill that could begin reshaping American health care," he said. "It may be the best they can get. . . . But I don't think it's a disaster."
Predictions say 'business as usual' in health care.
Pitney Bowes plans to cut staff
Author: Rob Varnon Date: December 16, 2009 Publication: ConnPost.com Link to Article
Pitney Bowes Inc. plans to slash as many as 10 percent of the Stamford-based company's work force in the next two years.
"Though we are still finalizing the full range of actions that we expect to implement over the next two years, the estimated total pre-tax costs associated with this program will be in the range of $250 (million) to $350 million," Michael Monahan, Pitney Bowes' executive vice president and chief financial officer, said during a conference call Tuesday with analysts. "These will be mostly cash costs. The anticipated charges include the elimination of up to 10 percent of the positions in the company as we restructure operations, improve processes, refine product portfolios and enhance productivity."
According to its latest annual report, the company that makes postage meters and supplies mailing and document-handling services employed about 35,000 people around the world, so a 10 percent reduction would mean the trimming of 3,500 jobs. But a spokesman said Pitney Bowes has not finalized any numbers or where the cuts will come.
Matt Broder said Wednesday the company has begun reviewing its operations and has not notified any employees or decided whether all divisions will face cuts.
"It's a process-based look at our company," Broder said. "We're really taking a look at every business."
Pitney Bowes used the phrase "up to 10 percent" to reflect this approach to its restructuring, as Broder confirmed that the initiative is not being done strictly to hit a budget target.
Broder said the company has more than 2,500 employees in Fairfield County -- about 850 in Stamford, 1,150 in Shelton and a combined 550 in its Danbury and Newtown operations.
Pitney Bowes said it believes it will see a benefit to earnings in 2012, but several analysts on the Pitney Bowes conference call questioned why the company was not projecting more immediate financial benefits. According to a transcript of the call, company executives said that's because they intend to invest savings gained through the initiative back into the company.
Pitney Bowes reported net income of $103 million in the third quarter of 2009, up by more than 4 percent compared with the $98.22 million the company earned in the same period in 2008.
Paul Schatz, president of Woodbridge-based Heritage Capital, said the market had not punished or rewarded Pitney for its move.
Shares of Pitney Bowes traded down 34 cents to close at $22.96 on Wednesday on the New York Stock Exchange.
"Historically, people cut their work force long after they should have," Schatz said.
But Schatz, who does not own any shares in the company, was bullish on Pitney Bowes going forward.
"Longer term the stock trades very constructively," Schatz said, noting he wouldn't be surprised to see a 30 percent gain within a year.
"This one's worth a shot," he said.
No details yet on Pitney Bowes' cuts
People's buys NYC lender for $738M
Author: Rob Varnon Date: November 23, 2009 Publication: ConnPost.com Link to Article
Bridgeport-based People's United Financial Inc. said Monday it will spend $738 million to buy Financial Federal Corp. a New York City equipment-leasing lender.
The deal comes about two years after People's last unleashed its mountains of cash to buy Vermont-based Chittenden and its family of banks for $1.9 billion. The difference is that Financial Federal is strictly a lender to businesses, with a focus on equipment leasing for the construction, transportation and waste management industries.
Financial Federal shareholders will receive $11.27 and one share in People's, which makes the per-share price for Financial Federal $27.74, based on last week's closings. The deal is subject to regulatory review and Financial Federal shareholder approval.
Shares in People's initially Monday ticked up and then got punished by investors, losing 44 cents, or 2.67 percent, to close at $16.03 a share on the Nasdaq Stock Exchange. Federal Financial gained $6.06, or 29.49 percent, to close at $26.61 on the New York Stock Exchange.
"It's not the big headline deal that everyone has been waiting for," said Collyn Bement Gilbert, analyst and managing director of research and Stifel Nicolaus.
People's has been sitting on nearly $2.5 billion for nearly two years and investors were awaiting a major buy, which this was not, Gilbert said. However, she didn't see the acquisition warranting the down behavior of People's stock, because it is a smart move for the
Bridgeport bank, she said.
And the deal won't derail People's from going after a larger fish,
according to Gilbert, because Financial Federal has an overabundance of capital. And she noted that Federal Financial further enhances People's ability to grow assets, making a strong bank stronger.
"It's a great deal for the bank," she said.
People's leadership believes so, too.
"We are delighted that Financial Federal Corp. is joining People's United," said Philip Sherringham, People's president and chief executive officer. "Financial Federal is a leader in equipment financing and provides a valuable complement to our existing business lines, particularly, People's Capital and Leasing, our equipment-financing subsidiary. Furthermore, this transaction generates meaningful earnings accretion without diluting our capital ratios, which will continue to provide us with tremendous strategic flexibility in today's volatile markets."
Paul Schatz, president of Woodbridge-based financial advisory firm Heritage Capital, said the stock got pummeled because it is further proof that People's is being built to stay.
"Think about all the folks that thought 'People's was going to be the acquiree,' " he said. "That's been the common rallying cry of all the bulls; 'Buy it and it will be taken over.' "
That's not what's happened, he said, and so far People's has maintained a good position in a troubled industry.
Although Gilbert sees this as a good time to buy, Schatz said he doesn't believe so, but that's because he's down on the banking sector.
"They're in the banking business," he said. "The industry is still flawed, with dead money -- money that doesn't do anything."
Schatz said he believes the financial sector still has a lot more grief to bear.
"I don't believe the financial crisis is over," he said, and that has implications for the support structure propping up banks, like the Federal Deposit Insurance Corp., the Treasury and the Federal Reserve.
He said banks that are increasing their capital are doing the right thing.
"We're going to look back on this and say 'Cash really was king,' " he said, explaining the banks that are loaded with capital will be able to make some big moves when prices drop.
Getting a head start on your taxes
Author: Sonia Baghdady Date: November 22, 2009 Publication: WTNH.com Link to Article
(WTNH) - You may not be ready to think about tax time, but April 15th can sneak
up on you fast if you aren't prepared. Financial expert Paul Schatz from Heritage
Capital in Woodbridge shared some early tax preparation tips this morning on Good
Morning Connecticut to get the ball rolling.
Schatz says there are some things you can do before the end of the year that can
affect your filing next spring. Here are his tips:
Be very careful buying mutual funds through year-end
It's time to marry up your taxable gains and losses
Similar security substitution
It's not too late for ROTH conversions
Required Minimum Distribution Waiver
Temporary 0% Capital Gains Tax Rate
Overall portfolio review is a MUST!
Schatz also says to take the following tax credits into account when preparing to
file:
First time homebuyer tax credit
Cash for Clunkers and new cars
Qualified Energy Efficient Home Improvement tax credit
Alternative Energy tax credit
There are also these non-traditional tax benefits to consider:
Even if you cannot itemize deductions you are allowed a $500 ($1000 if married)
deduction for real estate taxes in addition to the standard deduction. Also, if
you cannot itemize deductions, you are allowed to deduct up to $1,200 in sales taxes
on a new car purchase after 2/16/09 in addition to the standard deduction.
There is a new American opportunity tax credit for education expenses for '09 and
'10 up to $2500 (100% of first 2k in expenses, and 25% of the next 2k in expenses).
If you do not have a sufficient tax liability to use this credit it is partially
refundable up to 40% of the credit. This phases out for income above 80k (160k for
married)
For '09 and '10 withdrawals from 529 plans for the purchase of a computer for higher
education are tax exempt. Prior to this you could only withdraw from a 529 for a
computer if it was required by the college as a condition of enrollment.
Schatz says if you get started early, doing your taxes will be much easier than
waiting until the last minute. For more information about Paul Schatz or Herital
Capital, visit the Heritage
Capital website .
Gold prices boost pawn, coin shops
Author: Rob Varnon Date: September 22, 2009 Publication: ConnPost.com
In tough times, precious metals, collectibles attract greater attention The young couple stood in front of coin shop owner Ed Zehall and asked what their jewelry was worth. After they heard the price, they looked at each other, weighing a choice between keeping sentimental symbols of affection against a more practical need -- the cash to pay bills.
Zehall, who owns Valley Coin in Seymour, said the couple took the money. He's had more than a few situations such as this recently, Zehall said, especially as gold prices have hovered at about $1,000 an ounce and silver has been flirting with $17.
"It's the kind of economy we're in," he said. "There are a lot of people hurting who need the money, so they're selling gold and silver items."
Zehall has bought class rings, wedding bands, heirlooms and silverware.
"I've seen people take the chain off their neck," he said. "A little girl asked her mom, 'Does this mean we don't have to move?' "
Pawn shops and jewelry stores have been advertising heavily that they're buying gold as they compete against out-of-state businesses that operate through the mail.
What makes all these businesses able to buy gold is that they also have to have customers on the other side to sell to.
Zehall said he has a list of people who have asked him to call them when he buys a batch of gold or silver.
Norman Belair, owner of Milford Coin Exchange, also said his business is good. He too has people selling and buying gold and silver.
Old "junk silver" coins are going well, he said. Those are dimes and quarters minted before 1965 with no collectible value but whose metal is worth more than their face value. A silver quarter is worth more than $3 in silver and a silver dime is worth more than $1.20 at today's prices, according to Coinflation.com.
Belair said it's important for people to get more than one estimate on their gold and silver. Shops set their payments differently.
For example, Belair said he paid 96 percent of the spot value for 24 karat gold jewelry Tuesday, but much less for 14 karat gold, which he said is only 58 percent real gold. So he discounts the spot price to reflect the 58 percent, and then pays only 65 percent of that for 14 karat gold. He follows a similar formula for silver.
When he sells pure gold, he marks it up by three percent or four percent more than the spot price.
Like Zehall, Belair has some regular customers looking for gold and silver.
"They're investor-type people," he said. He's also seen an increase in smaller investors trying to diversify their holdings into physical gold.
Belair said people should be cautious of taking the first offer a dealer or jeweler makes, not only because there are price differences, but the item might be worth more if it's an older coin or collectible.
People should research their items, and Belair said most of his customers know whether their best bet is trading in then for the gold or collectible value.
Unfortunately, some so-called collectibles have no value beyond their metal content. He said commemorative coins issued by the mint that were sold for $30 to $40 now command only $10 or $11 because "nobody wants to buy them."
Belair said gold makes sense as an investment because he believes it's going to keep going up in value as the dollar sinks, largely because federal spending is putting more paper money into circulation, potentially sparking inflation.
But a Woodbridge-based investment adviser Paul Schatz said he disagrees with the inflation theory.
"I think people are buying at exactly the wrong time," said Schatz, president of Heritage Capital. He said the smart money in the market is selling gold now and buying the dollar.
Schatz also said the inflation idea fails to recognize that the credit contraction, which started last year, still is going on.
"There are 1,000 banks on the FDIC's troubled bank list that could go under," he said. "That outweighs any inflation."
There are some gold backers who note gold's performance during deflationary periods has been good as well.
But Schatz said he's banking the dollar will rise next month, when he expects the stock market to fall.
FHA enacts finance, mortgage reforms
Author: Angela Carter Date: September 19, 2009 Publication: New Haven Register Link to Article
In the wake of the one-year anniversary of the collapse of investment banking firm Lehman Brothers, a flurry of reforms were announced Friday that would affect the mortgage and financial services industries.
The Federal Housing Administration, which offers insurance against mortgage loan defaults, announced Friday that its capital reserve ratio is expected to drop below the congressionally mandated level of 2 percent.
FHA Commissioner David Stevens said in a statement he plans to hire a chief risk officer for the first time in the FHA’s 75-year history.
Current fund reserves are sufficient to cover future losses, so the agency would not seek congressional action or a bailout, he said.
The agency is changing policies that affect FHA-approved lenders in a push toward regulatory reform.
Starting Jan. 1, lenders must submit audited annual financial statements to FHA, to prove they are adequately capitalized. No one who earns a commission — such as mortgage brokers, real estate agents or commission-based bank employees — will be able to order appraisals or potentially influence valuations.
Also, participating lenders will be required to have a net worth of $1 million, instead of the current $250,000.
Among other pending shifts, the Securities Exchange Commission released a proposal Friday to ban “flash orders” in electronic trading systems.
Paul Schatz, founder and president of the wealth management firm Heritage Capital LLC in Woodbridge, said flash orders involve putting trades through in a matter of instants before they hit public markets such as the New York Stock Exchange or the American Stock Exchange.
“It’s been going on legally for years and gives those firms a clear, millisecond advantage. Over time, that adds up to a significant amount of money, especially with fewer big players left in the industry,” he said. “If we want to fully level the playing field again, we need to correct this.”
Schatz also said FHA may not be asking for money right now, but could be firing a warning shot for 2010 or 2011.
“FHA is in full disclosure mode, not crisis mode,” he said. “I don’t think the taxpayer should pony up more money into the system. We’re are much more stable than last year. Let’s give capitalism and the system a chance to work this out.”
Ups & DOWns: Does the 10,000 barrier matter?
Author: Cara Baruzzi Date: September 13, 2009 Publication: New Haven Register Link to Article
Nearly a year ago, in October 2008, the Dow Jones industrial average garnered much attention when it sank below 10,000 for the first time in four years.
Now, as consumers nationwide struggle to emerge from a recession that has pummeled stock portfolios, eroded retirement savings and chipped away at home values, the Dow is poised to break through the 10,000 barrier in the other direction — surpassing it — perhaps by the end of the year.
But while the Dow surpassing 10,000, when it happens, likely will cheer Wall Street, area experts say the average investor should put little stock into the benchmark — a barrier that has far more psychological value than real merit in terms of signaling an economic recovery, they say.
"In reality, it means absolutely nothing. It’s as significant as 9,950 and 10,004,” said Paul Schatz, president of Heritage Capital in Woodbridge. “We’ve crossed above and below it so many times in the past decade, it becomes less and less relevant."
The index first exceeded 10,000 on March 29, 1999.
Although it may not signal an economic recovery is imminent, however, the Dow’s reaching 10,000 will have an impact on investors when it happens, he said. Psychologically, they like to see the fifth digit added to the Dow’s level when it surpasses 9,999, he said.
"Investors will equate that with a better market,” he said. “It’s much more important psychologically, and more so on the way up than the way down.”
The sense of security the number provides can be a strong one, said Joseph DeDomenico, a certified financial planner and owner of DeDomenico Financial Services in North Haven. People tend to feel wealthier when the value of their stock portfolio rises, he said.
"That certainly is more perception than reality,” he said. “The fundamentals of the economy and (the fundamentals of) the stock market are what indicate a recovery, not the level of the Dow."
DeDomenico and several other wealth managers and economists said broader stock market indexes, like the Standard & Poor’s 500, are better gauges of how the overall market is doing than the Dow, which is comprised of 30 stocks.
Investors should “resist the urge” to move their holdings around or make major changes to their portfolios simply because the Dow rises above the 10,000 mark, DeDomenico said.
The S&P 500 is a better indicator of how stocks are faring, said Donald Klepper-Smith, chief economist at DataCore Partners in New Haven.
"It means more if you can keep up with the S&P 500 than the Dow," he said.
An even better and broader index is the Wilshire 5000 Total Market Index, which gauges the performance of all U.S. equity securities, according to Schatz.
"The public is so enamoured with the Dow, which is just 30 big, stodgy stocks," Schatz said. "It does not represent the overall marketplace but it’s the most popular index."
While it may not be the best way to measure economic recovery, the Dow’s approaching 10,000 is a positive sign, said Nicholas Perna, economic adviser to Webster Financial Corp.
"Typically the stock market starts to improve before the economy does," he said. Some economists feel that a recovery — strictly in terms of gross domestic product growth — is imminent, though the labor markets and unemployment still pose major hurdles, he said.
"When (the Dow) starts rising, people feel better," Perna said, adding that one benefit to many workers is that their 401k accounts should start to grow somewhat, or at least stop declining. “Real people are feeling the benefits of it."
However, Perna acknowledged that the Dow’s ascent to 10,000 does not mean the economy is strong.
"The Dow was as low as 6,600 back in March, but it had been over 14,000 in October 2007, so everything’s relative," he said. "We’ve made dramatic progress (since March) but we’re not even half way back to where it was before the whole thing started."
The typical consumer will feel as though the economy is improving when the job picture brightens, not when the Dow hits 10,000, he said, and job growth likely won’t occur until sometime next year.
"There’s a sense of uneasiness about this economic recovery that’s pending," Klepper-Smith said, noting that any recovery will be slow and gradual. “We’re getting to a point where some people aren’t going to be able to differentiate recovery from recession."
FuelCell turns onions into energy
Author: Rob Varnon Date: Sept 01, 2009 Publication: ConnPost.com Link to Article
A Danbury firm enabled Oxnard, Calif.-based Gills Onions to create electricity using old onions and a process that mimics how the human body expels gas.
FuelCell Energy of Danbury recently celebrated the installation of two 300-kilowatt Direct FuelCell power plants at Gills Onions. There in California, Gills extracts juice out of the 300,000 pounds of onion waste it produces per day, lets it ferment in an anaerobic digester system, and uses the biogas formed from the process to power the new fuel cells.
The installation, with a price tag of nearly $9.6 million, has an expected payback for Gills of six years and will provide 35 percent to 45 percent of the farm's electricity needs.
As U.S. officials push for new green technology and tighter pollution standards, a key question for business owners is when does it pay to invest in technology such as fuel cells and what can that mean for investors.
Paul Schatz, president of Woodbridge investment adviser Heritage Capital, said there are several different investment groups in this equation. The first would be investors in a publicly traded company buying the technology, but he said he didn't believe the investment presents any risk. The board of directors isn't going to plunge a into ruin by buying clean technology, he said, instead it will make business and environmental sense.
Another type of investor is looking to make money off of the green movement. Right now, those investors are struggling, he said.
"Sadly, the easiest way to play alternative energy is to buy oil," Schatz said, explaining the alternative energy stocks go up when oil prices rise but also fall when oil prices drop. It's simply that when fossil fuels cost more, then people turn to alternatives.
Light sweet crude oil dropped 21 cents to settle at $65.42 a barrel Wednesday on the New York Mercantile Exchange.
Finally, there are the owners of factories and other facilities looking to invest in alternative energy for a possible competitive advantage.
"It can be a pretty big gamble," he said, but that depends on the incentives and payback point for the business. The owner has to know when he's going to break even, Schatz said.
Richard Shaw, director of business development at Danbury-base FuelCell Energy, said what's unique about Gills is also an exciting application of existing technology.
Most fuel cells rely on natural gas to create energy. The gas is pumped into the fuel cell and hydrogen is extracted and converted into energy, but other fuels can be used, including methane.
Shaw said the anaerobic digester processor is an existing technology used most often with wastewater-treatment facilities. The fuel cells plug into the digesters and create energy.
"Gills Onions is different in that it's a food-and-beverage industry instead of a wastewater-treatment industry," he said. FuelCell Energy has installed similar types of systems at Japan's Kirin Brewery and Sierra Nevada's Brewery in California.
Shaw said FuelCell's sales are good on the coasts because electricity prices are high and environmental standards are stricter, which provides further incentives to use a zero-emissions system such as fuel cells. There are also federal and state tax breaks.
In the case of Gills, the business received a $2.7 million California state grant to cover part of the cost.
FuelCell's in-state rival in the industry, UTC Power, also has had some recent success in new installations, despite the economy.
"There's definitely still interest, but certainly the economy has affected everyone," said Peg Hashem, a UTC Power spokeswoman.
UTC Power announced July 1 that it would install two fuel cell systems on-site at the Coca Cola Enterprises facility in Elmsford, N.Y. Coca Cola Enterprises is the world's largest Coca Cola bottler. Together, the fuel cells will generate enough energy and heat for 30 percent of the facility's operational needs. They also will serve as a backup source of power in case of a utility outage. UTC Power will own, operate and maintain the fuel cells as part of a 10-year energy services agreement.
The project received a $2 million grant.
"The reality is that fuel cell companies are selling most of their products in California, Connecticut, Massachusetts and New York -- states that offer incentives and where the spark spread is high," Hashem said. Along with seeing a cost benefit to the technology, she said businesses are investing in it because they believe in sustainability.
Andy Brydges, a Connecticut-based principal consultant for energy consultant Kema Inc., said there are different technologies for different businesses and organizations. His firm helps companies find the alternative energy solution that fits them -- especially in how long it will take before they break even.
"A university might have a different tolerance than a private business," he said. "Two to three years might be too long for some private businesses."
As for how today's lower energy prices are affecting the industry, Brydges said it's merely a short-term blip for the industry.
"I am not concerned in the long run," he said, adding that he believes oil and gas prices will continue to trend higher and make alternative energy more attractive.
Financial calm after the storm
Author: LIVE INTERVIEW Date: Aug 30, 2009 Publication: WTNH.COM Link to Article
New Haven (WTNH) - We've been hearing from experts that the recession may be over. Now that the economy is getting back on track, what steps should regular investors take to get the most out of their money?
Finance expert Paul Schatz from Heritage Capital in Woodbridge answered that question for us on Good Morning Connecticut Sunday morning, and also addressed the issue of government involvement in the economy.
Paul says the financial markets have rallied dramatically since the March bottom, thanks to the economic stimulus package, the Cash for Clunkers program, and several other factors.
However, there may be "unintended consequences" to all the government action taken to stimulate the economy, said Schatz.
"We were staring over the abyss to almost nonexistance," said Schatz of the March bottom. "The Treasury, the Fed, the world pumped tens of trillions into the system. It's not a 'get out of jail free' card or free pass. We're going to pay the price over a period of years and maybe decades."
Paul says that price could be serious inflation.
As for what investors should do next, Paul suggests that every investor ask themselves the following list of questions before investing for the coming month, quarter, or year:
Is your portfolio prepared for a spike in inflation?
How will you protect your money?
What will you do if we see a repeat of 2008?
How are you positioned for an endless stream of record budget deficits?
What if the economy doesn’t recover?
Is your portfolio prepared for job loss?
Are you ready to see your taxes increase in 2010?
In a nutshell, Paul warns investors to be prepared for the markets to take a sudden plunge. He does not expect them to fall as dramatically as they did in March, but he does expect them to decline sometime in the near future.
Drinks Americas gets stiff $5M deal
Author: Rob Varnon Date: August 18, 2009 Publication: Connecticut Post
Wilton-based Drinks Americas has cut a deal with an unnamed investor to fortify the marketer of celebrity-branded beverages with a $5 million financing agreement.
The deal, announced Tuesday, will allow Drinks Americas to fund operations, inventory, production and sales efforts after weathering a fiscal year in which it saw its sales revenue nearly halved.
"This financing will go a long way in funding the production of our current brands and provide the capital needed to launch Kid Rock's American Badass Beer," Drinks Americas Chairman and Chief Executive Officer J. Patrick Kenny said in a statement.
The company markets a variety of beverages that have been branded by celebrities it has identified as iconic, including Willie Nelson's Old Whiskey River Bourbon, Trump Super Premium Vodka and Kid Rock's beer.
Drinks had net sales of $2.4 million for the 12 months that ended April 30, compared with $4.5 million for the 12-month period that ended April 30, 2008. Drinks Americas trimmed its net loss to $5.04 million from the more than $6 million it lost in the 12 months that ended April 30, 2008.
The terms of the deal would be tough to swallow for a company whose stock was in a stronger position, according to Paul Schatz, president of Woodbridge-based Heritage Capital.
"It's a penny stock," Schatz said. "They have to pay an awful lot to entice the capital to come."
In exchange for drawing down funds the investor has made available,
Drinks Americas will issue Series B Preferred Stock and five-year warrants to buy common shares valued at 135 percent of the drawdown.
The preferred stock will accrue dividend at an annual rate of 10 percent, which will be paid in additional preferred stock. Drinks Americas can redeem the preferred stock after five years and can repurchase them under other conditions at any time.
Schatz said that gives Drinks Americas five years to come up with the money or to find another deal before this one ends.
Although it is a tough deal from Drinks Americas' perspective, Schatz said if the company makes it work, the investor will see good money; if it doesn't, the loss would not be a surprise.
"Our financial partner understands and believes in our business model and sees the potential of our company," Kenny said.
Kenny and Richard Kreger, senior managing director of investment banking for Source Capital Group Inc., said the funding will help the company fill orders for the Kid Rock beer, which is available in Michigan.
Source Capital acted as the placement agent for this deal.
Shares of Drinks Americas, traded over the counter, closed Tuesday at 14 cents a share, up a penny.
Bond ETFs Rally On Fed Testimony
Author: Trang Ho Date: July 21, 2009 Publication: INVESTOR'S BUSINESS DAILY
Bond ETFs rallied Tuesday as Federal Reserve Chairman Ben Bernanke told Congress that "limited inflation pressures" will allow policymakers to keep interest rates near zero for an "extended period."
The yield on 10-year Treasury notes fell to the lowest level in five days. It closed down 10.8 basis points at 3.477%.
IShares Barclays 20+ Year Treasury Bond Fund (TLT) jumped 2% to 93.55. It closed just above its 10-week moving average. TLT, the most widely traded bond ETF based on average daily dollar volume, yields 4%. It has fallen steadily since hitting an all-time peak in December at 123.15.
TLT trades 23% below its 52-week high. It carries IBD Ratings of 22 for Relative Strength and D+ for Accumulation/Distribution. The ETF has traded below its 200-day moving average since late April. Its 10-week line crossed below the 200-day line in mid-May. But TLT started rebounding off of a two-year low of 87.56 June 11, when the market peaked.
IShares iBoxx & Investment Grade Corporate Bond Fund (LQD) on Tuesday popped 1.4% to 101.89 — a six-month high — in above-average volume. The ETF has been in a steady uptrend since the market bottomed March 9. But it bucked the market's four-week slide that started in mid-June. It shows strong support at its 10-week moving average line. LQD faces prior resistance at 102.60 — its January peak. It sports 47 RS and D- Acc/Dis Ratings.
Short-Term Play?
Paul Schatz, president of Heritage Capital, opened a position in TLT on the belief that it was oversold in the short term.
"The July pullback corrected the June rally and it looks like the recent highs around 97 should be tested," said Schatz. Sentiment indicators suggested that bond traders are very negative on Treasuries, Schatz added.
He's considering shorting LQD if it reaches 103 as a hedge against his individual corporate bond holdings.
Credit Suisse analysts also took a contrarian view in the short term. "Bonds no longer look attractive," and "look slightly expensive," Credit Suisse stated in an investment strategy report released Tuesday.
"We believe that we are halfway through the first 'V' of an upward- sloping W-shaped recovery, with a likely peak in early Q4," wrote Credit Suisse's Andrew Garthwaite and a team of analysts.
But they didn't recommend underweighting bonds because they believe "inflation will surprise to the downside" and that demand for bonds will be high.
"Commercial banks are likely to be heavy buyers of government bonds, as they were in Japan in the late '90s," Garthwaite wrote. "If the U.S. banks were to have the same share of bonds on total assets as in the early '90s, they would need to buy around $1.2 trillion of bonds.
Webster loses, gains in second quarter
Author: Rob Varnon Date: July 17, 2009 Publication: Connecticut Post
For the first time in five quarters, Webster Financial Corp. posted positive net income, but not from its business operations.
The Waterbury-based bank had an operating loss of $31.6 million for the second quarter but reported positive net income available to investors of $16.8 million, or 31 cents a share. The gain came from an exchange offer for convertible preferred stock and trust preferred securities that contributed $173 million in additional equity to the bank, partially offset by charges for write-downs and sales of investment securities and a special FDIC assessment.
Shares of Webster climbed 66 cents to close at $9.29 Friday on the New York Stock Exchange. Volume topped more than 3 million, double the daily average.
Webster's consecutive losses began in the second quarter of 2008, when the bank reported a net loss of $28.9 million or 56 cents per share.
"Next quarter we'll know if we've crested," said James Smith, chairman and chief executive officer, during a phone interview. Smith touted the bank's surge in deposits in the quarter and a slowdown in the delinquency rate.
Total deposits increased by more than $1 billion compared with a year ago, and non-performing assets increased by 10 percent, or $36 million, during the quarter, $24 million of which were restructured loans.
Smith said accounting standards require the bank to count restructured loans as nonperforming assets.
"They've averted the immediate disaster," Paul Schatz, president of investment advisor Heritage Capital in Woodbridge, said in explaining why Webster's shares climbed during the day. Schatz said regional banks that are showing less bad news are benefitting, but he doubts a return to the stock's 52-week highs, which were in the $30 range.
Low-Rated Bond ETFs Outdo Market
Author: TRANG HO Date: July 13, 2009 Publication: INVESTOR'S BUSINESS DAILY
High-yield bond ETFs rallied off the March low along with stocks. But they did not follow the market as far south in June. While the S&P 500 has corrected 7% from its June peak, iShares iBoxx $ High Yield Corporate Bond (HYG) eased 4%. SPDR Barclays Capital High Yield (JNK) fell 5.5%.
Paul Schatz, president of Heritage Capital, holds short positions on JNK and HYG. But he believes they'll continue higher long term.
"We're seeing a routine correction after a monstrous rally," Schatz said. "When the pullback ends, high yield will see new highs by the middle to end of September."
HYG lost 23.9% in 2008. It's returned 7.04% year to date. It yielded 11.52% as of July 9 vs. 3.29% for the benchmark 10-year T-note. HYG holds debts from 122 companies with an average B- S&P credit rating. It charges investors 0.5% of assets a year to cover expenses.
JNK fell 30.2% in 2008 and has gained 12.3% this year. It also yields 11.25%. It carries a 0.4% expense ratio.
Chart patterns for HYG and JNK look the same. Both crossed above their 200-day moving averages May 18 and peaked June 12.
The main difference is that JNK sports higher Relative Strength and Accumulation/Distribution Ratings of 59 and B. HYG has a 52 RS and D- Acc/Dis.
U.S. Junk Bond Performance
The U.S. High Yield Index returned 3.18% in June. In the first half of the year, it jumped a whopping 29.37%. That's its largest first-half return in its 23-year history, according to Merrill Lynch Global Bond Indices. It needs to gain another 5% to get back to where it started 2008.
"We could be entering a period in which coupon income emerges as the dominant return factor for high yield," analysts wrote in a Bank of America Merrill Lynch bond report. The risk premium for high yields has dropped at an unprecedented rate over the past six months, according to Standard & Poor's U.S. High-Yield Prospects report. The spread of S&P's speculative-grade composite index fell to 9.71% over Treasuries on July 1 from 16.47% at the end of 2008.
The average yield for June issues was about 10.5%, according to S&P. Although high, it's lower than new issue yields in the first quarter.
High-yield issuance peaked at $137.7 billion in 2007. Total bond issuance eclipsed $1 trillion that year. In 2008, high-yield offerings collapsed 71% to just $39.5 billion. So far this year issuers have raised $49.1 billion, up 24% from 2008.
Commodities suit many needs
Author: Rob Varnon Date: July 09, 2009 Publication: Connecticut Post
Commodities investing might be among the most egalitarian of venues, where institutional investors, the ultra-wealthy and the average Joe all can get access, either through trading firms dealing in tanker-sized loads of oil and gas, or from coin dealers selling a Golden Eagle or a silver Roosevelt Dime.
But these days, the market is feeling the push and pull of regulation and demand, with growing calls to keep speculators from driving up consumer prices, especially for energy.
The Commodities Futures Trading Commission is holding a series of hearings this month and next focusing on several topics. The first round, according to the commission, "will focus on whether federal speculative limits should be set by the CFTC to all commodities of finite supply, in particular energy commodities, such as crude oil, heating oil, natural gas, gasoline and other energy products. This will include a careful review of the appropriateness of exemptions from these limits for various types of market participants."
The major investment banks in the country were allowed exemptions from this rule and ran up large positions in some of these areas.
On the same day it announced plans to hold hearings on limiting speculation, the commission also announced it was taking action against a California-based commodities firm that co-mingled $17 million in investors's funds with that of the company's.
However, there is growing interest in commodities because return on equities and bonds aren't what they used to be, said Greenwich resident Stafford Bucknall, an MF Global Inc. manager based in Manhattan.
Bucknall said he could not speak for MF Global on the subject of the commission's actions. But he said investors should make sure the firm they place their money with is trading in commission-regulated markets in segregated funds, which are separate from the firm's.
"If you go into unregulated markets, it's you versus your counterparty," he said.
Bucknall also said to beware of high pressure sales tactics. MF Global doesn't engage in that practice. It provides information on markets to investors and does take positions on the way the markets are moving.
"The key to any futures speculation is to manage and limit your risk," he said.
Bucknall said smaller investors, with accounts in the $5,000 range, should stick to buying options, in should stick to buying options, in which the investor agrees to buy at a certain price and is risking only a premium. It's important that an investor look at a trading ratio of 1-to-3, meaning for every dollar risked, there is the potential of gaining three in profit, he said.
An option limits that risk, but investing in a futures contract requires a bigger pocketbook and a sturdy stomach.
"In futures, you can lose more than you put up," Bucknall said, noting that many futures contracts are leveraged at more than 95 percent and an investor can be on the hook for 20 times the initial investment.
A single contract for gold on the New York Mercantile Exchange is 100 ounces and a single contract for heating oil is 42,000 gallons. When you buy a futures contract and hang onto it, you are supposed to take delivery of the product.
Bigger investors such as hedge funds and corporations, can accommodate such orders, and some are buying the contracts for that purpose to hedge their materials costs.
For example, the futures market allows a jeweler to fix costs for gold over the course of a year, Bucknall said.
"It's a good time for managed futures," he said.
Paul Schatz, president of Woodbridge-based investment advisory firm Heritage Capital, recommends smaller investors use exchange-traded funds to get their fix of commodities. These funds allow investors to in effect buy shares of a fund that replicates the performance of an index of stocks or commodities. But it's infinitely more affordable, Schatz said.
Futures contracts aren't generally for the small-time investor, he said. A single gold contract at Wednesday's prices would be the equivalent of $907,600.
And Schatz said, investing in commodities can be conducted at the retail level, pointing to coin shops where a person can buy gold and silver coins.
As with any investment, investors should verify the authenticity of what they are buying and investigate the dealer. Schatz also said that coins contain different levels of purity when it comes to gold, not to mention that they also bear some historical value, which also is a component of the price.
That's another drawback to coin buying, Schatz said.
"The downside of buying gold and silver coins is the markup is substantial," he said. Alternative to equities has something for all.
General Motors to close 1,100 dealerships across U.S.
Author: Angela Carter Date: May 16, 2009 Publication: New Haven Register
As General Motors Corp. said Friday that it would not renew 1,100 franchise agreements across the country, the company was mum on the specific locations, a move decried by some as potentially damaging to consumer confidence.
The announcement comes on the heels of Chrysler LLC’s decision to close 789 retailers nationwide, seven of them in Connecticut.
GM spokesman Pete Ternes would say only that GM has 70 total dealerships in Connecticut selling variable lines of its Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Hummer, Oldsmobile, Opel, Pontiac, Saab, Saturn and Vauxhall brands.
Mark LaNeve, North America vice president of vehicle sales, service and marketing, said the company would start notifying dealers by letter Friday, but that the notices would not come as a surprise.
GM closely monitors performance measures such as sales, working capital, customer satisfaction and profitability, and the franchises targeted for the Friday notices have been falling well below their state average and peer dealerships.”
The cuts are part of a larger plan to drop 2,600 of its 6,200 dealerships as the automaker struggles to become profitable again. LaNeve said the company also will be deciding whether to eliminate or sell off the Saturn, Hummer and Saab brands, which would then continue to operate outside of the franchise.
The U.S. Department of the Treasury is reviewing GM’s revised Viability Plan, and depending on the Treasury’s conclusions, the automaker will decide whether or not to file bankruptcy, Ternes said.
The franchise agreements are set to expire in October 2010 and affected dealerships are expected to “wind down” between now and then, but there is a possibility that healthier franchises may choose to close on their own, LaNeve said.
Franchisees of approximately 200 dealerships have chosen to shut down since January and the agreements spell out the terms for such moves, said GM spokesman Pete Ternes.
LaNeve said that for existing customers, GM would stand behind warranties.
GM would face “a cash flow hit,” LaNeve said, if dealerships closed all at once instead of gradually, because the company has to buy back inventory the retailers cannot sell. The dealers receiving letters account for 65,000 vehicles as of Friday.
Under the restructuring, some salaried workers already have left the company, executives have taken a 10 percent cut in pay, other workers have taken lesser reductions and no bonuses are being awarded, Ternes said.
Around Greater New Haven, some dealership officials had already gotten signals from GM that they were not included in the downsizing.
“We were told weeks ago that we were OK,” said John Zito, general sales manager at Dave McDermott Chevrolet Inc. in East Haven. “We know that for a fact.”
Zito said he hopes GM changes its mind, about not disclosing the locations targeted for closure.
FedEx letters bearing the bad news began arriving Friday morning at GM dealers around the country. The letter states that dealers were judged on sales, customer service scores, location, condition of facilities and other criteria.
However, the letter left open the possibility that the decision could be reversed and each dealer will make a decision about whether or not make public the closing.
Both Chrysler and GM say they are cutting the number of dealers because they have too many outlets that are too close to each other, and the competition drives down prices. But as the ranks of dealers thin and competition decreases, that likely will mean higher prices for car and truck buyers.
GM’s revenue for the first quarter of 2009 was $22.4 billion, down 47 percent from $42.4 billion in the same quarter last year, according to its earnings report.
Frank Mikolike, general sales manager at Bob’s Buick-Pontiac-GMC of Milford, said around midday that the dealership had not heard anything. The owners were not available for comment. “None of us have been informed, but I honestly don’t know,” Mikolike said.
Hugh Fiore, owner of Harbor Motors at Old Saybrook Auto Mall, said that none of the Pontiac-Buick-GM dealers in his territory of service were notified that they are under-performing. “I’m grateful, after being in the business for 21 years. I built this building in June 1989,” Fiore said.
Donald Klepper-Smith, chief economist at DataCore Parters LLC in New Haven and chairman of Gov. M. Jodi Rell’s Council of Economic Advisors, said GM’s decision is likely to force potential buyers to drive farther to shop around, and existing customers will have fewer choices for service locations. “It creates more economic uncertainty with regard to spending,” he said. “It’s an advantage for Ford and the imports.”
The company’s stock fell 6 cents, or 5.2 percent, to $1.09 on the New York Stock Exchange Friday.
“I don’t think today’s news moves the needle whatsoever for the stock. ... The news today has been reflected in the stock price for weeks and weeks and weeks,” said wealth manager Paul Schatz, president and founder of Heritage Capital LLC in Woodbridge. “This will have more of an affect on running the business than on the stock market. I think GM’s decision definitely will affect consumer confidence.”
Financial planning with Paul Schatz
Author: LIVE INTERVIEW Date: May 15, 2009 Publication: WTNH.COM
New Haven (WTNH) - Paul Schatz, President and CIO of Heritage Capital in Woodbridge joined GMC Weekend with some financial advice in these tough economic times.
Schatz says there are signs of a turnaround. Specifically, the market has gained 30% since it's bottom point in March. But he warns against 'misguided hope.' He says any recover will be slow and methodical.
Schatz says the DOW could reach the 10,000 mark again this summer. But he feels a return to the 14,000 level is a very long way off.
His advice to investors remains patience; buy in a weakness and sell in a strength when it's possible. But much like the market in general, there's no immediate fix for your portfolio. The road to recovery is a long one.
Investors await earnings reports
Author: Rob Varnon Date: April 15, 2009 Publication: The Advocate - Stamford
Like gardeners greeted by the smells of mulch mix and fresh daffodils, investors are sampling the odors of failure and success clinging to Wall Street as spring earnings come into bloom.
Starting with Bridgeport-based People's United Bank, which reports first-quarter results today after the closing bell on the Nasdaq index, the state will get a whiff of how its publicly traded companies, and the national economy, are shaping up this year.
"The actual reported earnings aren't important. Everyone knows it's bad. What is extremely important, more so than at any other time, is what their outlook is over the quarter and year," said Paul Schatz, president of investment advisory firm Heritage Capital of Woodbridge.
He said investors should be watching for signs that some companies are seeing a pick-up in demand for their services and products.
Schatz said what he likes about the overall market right now is the intense scrutiny of earnings.
"It's amazing that people are taking such a negative tone to earnings reports," he said. "It's a positive sign for the market that people are being so skeptical. It's good healthy behavior. It's exactly what you've seen near market bottoms."
Schatz said he believes the market is rallying, and the Dow Jones Industrial Average is headed to 9,000 to 10,000 this year.
He also said companies will be punished for not having an outlook on the rest of the year or having a poor outlook.
A bank, such as People's United, which is packed with capital, is in a difficult position, Schatz said.
"They should be looking to acquire a smaller bank," he said, but the smaller banks are the ones that are in good financial condition and aren't bargains in this environment.
People's United also will be setting the bar for its chief rivals, NewAlliance and Webster banks, based in Connecticut. To date, most analysts place People's United in a stronger position than those competitors, but time and balance sheets will tell.
Fairfield-based General Electric Co., which reports Friday, has had a terrific bounce in the market, Schatz said, but the question is where GE's growth potential lies. Schatz said he believes the company needs to spin off some of its companies, but he added GE has had a bit of good news as the federal government has promised not to let financial companies fail, and changes in accounting rules could benefit GE's financial divisions in Stamford and Norwalk that were laboring to deal with bad loans.
ACME United of Fairfield, a manufacturer of office and cutting instruments, also is reporting Friday. According to analysts, its challenge, like many other manufacturers, needs confidence to return to consumers but also must show some capital strength to weather difficulties.
Norwalk-based Xerox Corp., which reports next week, is getting hammered, Schatz said, because its market for copiers and digital printers is in shambles.
Mark Luschini, chief investment strategist of Philadelphia-based adviser Janney Montgomery Scott, echoed Schatz on some fronts, but added that companies are going to have to prove their earnings are repeatable.
"As investors are parsing the news, they are looking for two things, the quality and sources for those earnings," he said. One-time events that lift earnings are not going to be greeted as strongly as sustainable sources, he said.
Like Schatz, Luschini said the companies need to talk about their prospects.
In local companies, investors will have a window on the global economy, he said, especially in the coming weeks.
"You're going to see a little bit of everything, a regional bank, and then couple that with GE, an industrial business," Luschini said.
When it comes to banks, he said they have to deal with questions about the strength of their commercial-lending portfolio and if they have one, their credit card business.
These lending areas have come under pressure and many analysts see them as potential problems.
Ultimately, flash and spin are losing out to companies that show actual strength in fundamental areas.
Some upcoming Connecticut earnings Today: People's United Bank Friday General Electric Co. Acme United Corp. April 22 Terex Corp. April 24 Xerox Corp.
Investing smart in the recession
Author: LIVE INTERVIEW Date: March 29, 2009 Publication: WTNH.COM
New Haven (WTNH) - Paul Schatz, President and CEO of Heritage Capital in Woodbridge, was here this morning to talk about the latest details on the economic
stimulus package, and what it means for investors.
Here are some tips Schatz offers to investors on how to invest smart in
this tough ecomonic climate:
If you weren't comfortable with what you owned on the
way down, use the rally to reposition for the future.
Sitting tight and hoping
for the best is accepting failure. Hope is NOT an investment strategy.
Look to other
asset classes besides the standard stocks and bonds, which were both decimated in 2008.
Seek
protection from the unintended consequences of government and Fed action with a variety of market
strategies.
What worked well in the recent past, does not usually
work well going forward.
For growth-oriented investors, technology, energy and
emerging markets should fare well during the rally into the summer.
Stashing it Away: Is there a "best" place to put money?
Author: Cara Baruzzi Date: March 8, 2009 Publication: New Haven Register
One area financial advisor says stock market investors are in a "puke period," jolted back and forth by sharp, zigzagging rises and falls in the Dow Jones industrial average and other indexes. Another is urging clients to have a "Holy Mackerel!" account of six to nine months’ worth of living expenses saved up in case the unexpected becomes a reality.
Amid the most uncertain economic times in decades, a growing number of consumers are financially strapped and wondering what to do with the money they do have. At a time when many stocks are losing value, more companies are ceasing to invest in workers’ 401(k) accounts, and retirement fund statements have consumers seeing red, it is difficult to know where the safest bet is.
"Staying the course is not an investment strategy," said Paul Schatz, president of Heritage Capital LLC in Woodbridge, who used the "puke period" description. "I think that’s where so many people went wrong. Hope is not an investment strategy."
Tough times, in which many have seen the recession eat into their savings and investments, are making people more willing to try new strategies, he said. Clients who previously were opposed to change, he said, are now "on hands and knees crawling through the desert, looking for an oasis."
"You’ve got to sit down and put together a plan," Schatz said, although what that plan entails differs depending on an individual’s circumstances. Portfolios should be diversified among different asset classes and, ideally, will help make a comfortable retirement a reality, he said.
"Every situation is different," said Jennifer Polla, a financial planner at Shelton-based Barnum Financial Group. The best investment strategy "depends on your time horizon and when you might need the money."
For those in for the long haul, the stock market is still a wise choice for people with enough pre-retirement time to ride out the current downturn, she said.
For others, including those who are near retirement or worried about potentially losing their job, it is important to have enough liquid assets to tap into in case of emergency, she said. Polla is urging clients to have a "Holy Mackerel!" fund of up to 9 months’ worth of living expenses saved up in case income is suddently lost or another unexpected event occurs. Traditionally, consumers have been advised to save three to six months’ worth of living expenses, but the amount has been augmented in this economy.
"People are really worried right now. People are really assessing what they have on hand," Polla said. The six to nine months’ worth of savings should be in "cash," meaning its easily accessible — in money market accounts or certificates of deposit, for instance, she said.
For those retiring in the next few years, certain annuity products that offer income guarantees that investors won’t outlive the money are becoming increasingly popular. Overall, she said, investments should be spread among stocks, bonds and cash.
For those in the stock market, braving the volatility, shares of companies that make consumer staples — everyday items that shoppers always need — tend to hold up relatively well in economic downturns, said Eric Tashlein, a financial planner at Connecticut Capital Management Group in Milford.
"We feel you should have a good dose of those holdings," he said, adding that some dividend yields on stocks are higher than the return on cash and bonds now.
Another potential place to turn is bonds, said Glenn Ufland, financial adviser at Ufland and Associates in Woodbridge, a branch of Ameriprise Financial.
"We’re finding a lot of value in high-quality corporate bonds and municipal bonds," he said. "Typically in a recession, that’s a good place to be."
Chris Getman, president of Soundview Capital Management Corp. in New Haven, agreed that good-quality short-term corporate bonds are something to consider. "You can get a nice yield there."
Despite its volatility, the stock market may provide some opportunities as well, he said. "I wouldn’t throw all my money into the stock market," he said. "(But) we’re buying big quality blue chip companies that pay dividends. You can get rewarded nicely just with the dividends."
Schatz at Heritage Capital said investors should be mindful that the stock market tends to be a leading indicator, since stock prices gauge investors’ confidence — or lack thereof — in the future.
"The markets always, without fail, always bottom ahead of the economy," he said. When assessing how much of their portfolio to put in stocks, Schatz said, "Risk boils down to one thing: what you can (afford to) see your portfolio drop to."
In many recessions, advisors typically gravitate toward stocks in fields such as health care and utilities, which normally weather the storm relatively strongly, said Brett Dolan, managing partner at ClearView Wealth Management LLC in Guilford.
"But people are quickly realizing this is no ordinary recession," he said. "The old idea of buy and hold doesn’t work here. They need to do the opposite, which is to be a bit more tactical in their asset allocation."
Getting people to consider other investments — such as gold and currency exposure, which Dolan said may be a wise option for some — can be tricky, he said.
"People are a little bit reluctant" to change their strategies in some cases, he said. "Investors just always assume that the market is going to come back."
Regardless of the strategy they choose, investors should not be fearful of shaking things up, said Alan Weiss, president of Regent Wealth Management Group in Woodbridge and a financial columnist for the Register.
"Everybody’s concerned, especially those who are retired or about ready to retire. It’s a deep concern because nobody knows where the end will be," he said. "This is a very, very difficult market to just buy and hold and just stay the course. Investing isn’t easy and you have to really think a little bit out of the box."
Funds that track commodities such as oil, gas and natural gas may "start to become to become extremely attractive" as something for investors to keep an eye on, Weiss said.
Deciding what to do with one’s money can be a confusing task, especially with consumers being inundated with bad news about the economy on a nearly daily basis, said Serge Mihaly Jr., a financial adviser at Wachovia Securities in Hamden.
The uncertainty makes it that much more important for investors to be aware of where their money is, how it is performing, and where it may perform better, he said.
"People are very nervous; they’re uncertain about their future," he said. "Everybody has different needs, everybody has different goals."
Falling Dow-n: Index closes below 7,000
Author: Cara Baruzzi Date: March 3, 2009 Publication: New Haven Register
The Dow Jones industrial average’s record high of more than 14,000 was less than 1 1/2 years ago, but seemed like a distant memory Monday as the index sank below 7,000 for the first time since 1997.
The stock market, already hard hit by the recession, was dealt its latest blow when American International Group Inc. reported a massive $61.7 billion quarterly loss, injecting renewed fear into the market about the health of the financial system.
The Dow fell 299.64, or 4.2 percent, to 6,763.29. Broader stock indicators also slid. The Standard & Poor’s 500 index fell 34.27, or 4.7 percent, to 700.82, and the Nasdaq composite index fell 54.99, or 4 percent, to 1,322.85. The last time the Dow closed below 7,000 was May 1, 1997. The index soared to a peak of more than 14,000 in October 2007.
The 7,000-point threshold “is a round number, so people look at it as something significant,” said Chris Getman, president of Soundview Capital Management Corp. in New Haven. In reality, though, crossing the barrier is no reason for investors to panic, he said. Investors should remember that the Dow, while an important index, comprises only 30 stocks.
While the index’s slide may prompt some investors to sell shares, Getman said this is a time to find bargains for those willing to buy.
“When people say, ‘I just can’t stand it anymore’ (and sell shares), that’s when you want to buy,” he said. “You want to be a contrarian. It’s human nature to try and get your money back.”
When the economy, and the stock market, will hit bottom remains to be seen. Getman said he is hopeful the low point is imminent. When investors “have had it” and start leaving the market — as he has seen some clients do in recent weeks — “that’s usually the sign we’re getting close to the bottom,” he said.
The Dow has been volatile in recent months, often swinging to either a wide loss or gain depending on the economic news of the day.
On Monday, AIG’s revelation that it lost $61.7 billion in the fourth quarter — the biggest quarterly loss in U.S. corporate history — weighed heavily on stocks. Meanwhile, the government announced a revamped rescue package for the insurance giant that will give the company another $30 billion in taxpayer money “as needed.”
Later Monday, Freddie Mac said David Moffett is quitting his job as the company’s top executive after less than six months. The mortgage giant plans to ask the government for up to $35 billion in extra aid.
As the stock market continues to falter — along with the financial, credit and housing markets — one silver lining to the volatility is that every slide in the Dow is followed quickly by an upturn, said Paul Schatz, president of Heritage Capital LLC in Woodbridge.
“I’m not a believer in these magical, mystical numbers,” he said. “The Dow at 7,000 has about as much relevance as the Dow at 7,100 and 6,900.”
More pressing than crossing the 7,000-point threshold is that, with the Dow at its lowest since 1997, “we’ve essentially wiped out a generation of buy-and-hold index investors,” Schatz said. The last 19 months “have effectively wiped away a large percentage of retirees’ and pre-retirees’ plans. Should people be worried? Absolutely.”
Investors should be checking and tweaking their portfolios to make sure they are well diversified, he said.
More than 300 in state burned by Madoff
Author: Rob Varnon Date: February 05, 2009 Publication: Connecticut Post
The potential victims of Bernard Madoff's alleged $50 billion Ponzi scheme include more than 300 names with Connecticut connections, including actor John Malkovich and singer John Denver's estate.
While the rich and famous stick out on this list of thousands, hidden behind the names of pension funds are blue- and white-collar workers who could lose their retirements in this bitter tragedy of greed.
The 162-page list, submitted in the U.S. Bankruptcy Court filing of the Bernard L. Madoff Securities Investments case, is a catalog of devastation that reaches from shore to shore in America and across the sea to Italy, France and England.
Bernard Madoff, once a lion of Wall Street who served on blue-ribbon panels about investment strategies, has allegedly run a scam for years in which he used new fees from a variety of investors to pay dividends to other investors.
The list was compiled to help figure out who might be compensated when the assets of Madoff's firm are liquidated.
In an earlier interview, Paul Schatz, president of the Woodbridge investment adviser firm Heritage Capital, said Fairfield County is ground zero in the Madoff scandal, and the list released late Wednesday proves that.
Schatz did not invest in Madoff, so is not on the list, but he said at least 12 of his friends who thought they were getting into something good are now probably broke.
Besides Malkovich, who was connected to a Westport business at 25 Sylvan Road, John Denver Concerts Inc. and a pension fund related to the late singer were also listed.
The list also includes Dodger great Sandy Koufax and actor Kevin Bacon.
While the losses are huge for these stars, Madoff's scheme has also put in jeopardy years of hard work by people whose pensions were invested with him, including Orthopaedic Specialty Group of Fairfield. A few nurses at the medical practice have called the Connecticut Post in tears to relate fears that their pensions are gone.
Orthopaedic Specialty Group stands to lose $11.6 million in pension money that 125 employees and 15 doctors turned over to Madoff. Darien-based MAXAM Capital Management, which steered some town of Fairfield pension funds to Madoff, was also on the list.
MAXAM appears to have lost about $42 million of Fairfield's money with Madoff, but the town still has $235 million in its pension fund.
It looks like Bernard Madoff lost his family's money, as well. A number of Madoffs with Connecticut residences were on the list.
But not all the names should be on the list, according to Eric Moeller, a business operations manager for Resnick Investment Advisors of Westport.
"We are not now, or ever been, directly invested in any funds of Bernard Madoff," Moeller said when asked about his firm being listed twice. He said the agent collecting data on potential customers grabbed every address in the Madoff files and posted it.
Resnick was in those files because the firm has clients who were doing business with Madoff independently, Moeller said. As part of its service to help people invest, Resnick commonly asks clients about other investments and asks for reports from other firms - in this case Madoff's - about those investments.
That's why, according to Moeller, the Resnick name came up in the Madoff investigation. He said for similar reasons there are probably lawyers and accountants on the list who really don't belong there. There were, in fact, several public accountants and attorneys among the 312 Connecticut addresses listed.
The Madoff mess continues to suck innocent people and firms into it and leave a trail of distrust. Investment advisers with good reputations now must fight to keep their reputations, and people who thought they were going to retire in a year or two might have to keep working.
How to stimulate Connecticut's economy
Author: LIVE INTERVIEW Date: February 01, 2009 Publication: WTNH.COM
Paul Schatz, the president of Heritage Capital in Woodbridge, joined us this morning to talk about Governor Jodi Rell's new economic stimulus package, and what's ahead for us in 2009.
Connecticut is taking its own action to jump start the economy with Governor Rell's $525 million plan , which includes projects like bridge improvement, an upgraded rail line in New Haven and expansion of schools around the state.
The state stimulus will be paid for in borrowed money. State financial advisors say the state has a "stable" bond rating right now, which means we could handle borrowing the money.
Despite the debt, Governor Rell stands by a pledge that next years' budget has no tax increases. Schatz says in order to get Connecticut's economy moving again, she needs to take it a step further and cut taxes for businesses.
"Connecticut has one of the highest corporate tax rates around," said Schatz. "You want to bring business into Connecticut? Let's cut our corporate tax."
Schatz says bringing more businesses into the state will of course bring jobs along with them, which will in turn "fill the state coffer with income tax revenue from employees."
Schatz emphasized the importance of consumer confidence, which he says will come by cutting taxes rather than investing in costly infrastructure projects.
"Right now, [consumers] see this long, dark tunnel with no light at the end of it," said Schatz. "Capital projects are fine, but you've got to get people spending and feeling better. By cutting taxes just a little bit, they'll have more in their paycheck."
Chris Velardi asked Schatz the million dollar question: When will see the light at the end of the tunnel?
"I think the first and second quarters of 2009 will be the grimmest," he said. "The worst is right here in front of us for the next five months. You go from it being the worst to stabilization; from stabilization, things will start to get better and better."
Schatz says the key boosting the economy is real estate.
"Real estate led us down initially. Forget about growing- just stabilizing real estate is going to do a whole lot for this economy."
Governor Jodi Rell will give her budget address to the General Assembly at noon next Wednesday, but since things are so difficult, she has asked the state's major TV stations, including News Channel 8, for airtime.
Tomorrow, the governor will deliver a brief gubernatorial address about her approach to these tough times. Watch it on News Channel 8, starting at 6 p.m.
Bruno case opens practices to scrutiny
Author: Rob Varnon Date: January 27, 2009 Publication: Connecticut Post
Watching the Joseph Bruno corruption case in New York, or the other financial scandals erupting in the region, is a little like learning how sausage is made -- it's bad enough to make a someone turn vegan and find another way to make money.
Bruno is the former New York State Senate majority leader the U.S. Attorney's Office accues of using his office for personal gain. At the core of the government's case is Bruno's job as a solicitor for the investment advisory firm of Wright Investors' Services.
According to the indictment, the Milford company paid Bruno almost $1.4 million from 1994 to 2006 for clients the company landed after an introduction by Bruno.
What's begun to become evident in this case is how dependent investment advisers are on well-connected people like Bruno and the confusion about regulation of people being employed as solicitors.
Called solicitors, investment advisory agents or representatives, the position has multiple exemptions from registration at the federal level. The entity the solicitor registers with can become cloudy when the investment firm is in one state, regulated by the federal government and the solicitor works in a different state. That's the situation in the Bruno case.
The actual use of a solicitor is common.
Almost all investment advisory firms and brokerages have people like Bruno finding clients for them, according to Wall Street veteran John Gerlach, now an economics and finance professor at Sacred Heart University in Fairfield. He said there's probably 5,000 to 10,000 companies all vying for this kind of business.
"Almost every firm, they all have the same technical skills, so it's a question of personal relationships," Gerlach said, adding he doesn't believe Wright Investors did anything wrong in hiring Bruno.
"In a sense, it's no different than what the defense companies do to get introduced at the right level to who can open the right door," Gerlach said, describing federal officials who defense companies usher into vice presidencies after they retire from their government job.
In the case of Bruno, the government alleges the then-senator introduced Wright to union officials who had control over pension and other funds. Bruno retired from public office in 2008.
"It's a gold mine," Gerlach said of union funds. Some union officials have what amounts to carte blanche over huge sums of money, he said, and those officials can use it for political donations or investments, so getting a chance to manage their money is a big deal.
The government's main problem is with Bruno recommending Wright to unions that had business before the state Legislature. In all, Wright won 13 accounts and still manages at least six of those, according to the indictment.
Gerlach said while it's important to get the introduction, the investment firm must show the client results, or it will lose the account.
Wright Investors declined to comment on this story, citing the ongoing investigation of its former employee. Bruno ceased working for Wright in 2006.
Paul Schatz, president and chief executive officer of investment adviser firm Heritage Capital in Woodbridge, uses solicitors, too.
"I pay solicitors, but they're registered," Schatz said.
In Connecticut, a solicitor -- in most cases -- must pass a test and then works under the umbrella of the investment adviser's license.
It is unclear if Bruno was a registered solicitor in New York or was federally registered. He is not registered in Connecticut, according to the Connecticut Department of Banking, which noted Wright is regulated by the U.S. Securities and Exchange Commission because it has more than $25 million under management. Wright, in a filing with the SEC, said it has six to 10 solicitors.
The SEC would only say that if Bruno fit the definition of an adviser, he would have to register. It's unclear who actually regulates solicitors in New York, because the banking department does not.
When Bruno's current employer was asked about his registration status, his attorney, Bill Dryer, said, "We're not making any comments regarding the case."
Schatz said he's never come across Wright in his business dealings in Connecticut.
"We're all fighting for clients," he said. "But clearly, there is a right way and a wrong way of doing things."
Schatz said his solicitors, like all solicitors, are required to inform clients of their relationship to Schatz's firm. And Schatz said he has the client sign a form acknowledging the disclosure when they meet.
Richard Slavin, principal and chair of the Connecticut law firm of Cohen and Wolf P.C.'s securities group, said Schatz and other investment advisers must have clients sign that acknowledgement.
Slavin said confusion over Bruno's status isn't a surprise. At the federal level, there are a lot of exemptions to registering a solicitor, and someone trying to understand them would have to know the specifics of the adviser's employment.
But, Slavin said, whatever Bruno's status, Wright and Bruno were obligated to divulge their relationship to any clients Bruno brought to the Milford firm.
Hedging Your Bets: Investment plan eases energy worries
Author: Angela Carter Date: January 25, 2009 Publication: New Haven Register
Newly married, expecting his first child and paying a mortgage, Jeffrey Lucky jumped at an opportunity to compensate for fluctuating heating and gasoline costs.
When his investment adviser, Paul Schatz, founder and president of Heritage Capital LLC in Woodbridge, pitched a new approach to his portfolio, Lucky agreed.
Lucky & Schatz.
Schatz said that when oil hit a record high of $147.27 per barrel on July 11, 2008 — and correspondingly, the national average for gasoline hit an all-time high at the pump of $4.11 a gallon July 17 — he started to construct a model that allows his clients to hedge against rising costs.
"Energy is a variable cost, unlike a fixed-rate mortgage," Schatz said. "When oil was spiraling out of control, everyone’s biggest concern was the top, where will it ever end?"
Expecting that costs would go down eventually, Schatz developed a formula whereby clients calculate how much they are spending annually for home heating oil and gas for their cars and then decide how many years they want to apply the strategy.
For example, if someone spending $5,000 a year in home heating oil and $2,500 a year for multiple cars were to hedge for the next three years, that client would send Schatz $15,000 against heating expenses and $7,500 against gas fill-ups.
Schatz then invests that money only in securities on the New York Stock Exchange that move dollar for dollar with energy prices.
"If gas was $2 a gallon today and it goes up to $3, that client will pay more at the pump but the value of the portfolio goes up by 50 percent. If gas goes down at the pump, they’re paying less for gas, but the portfolio goes down. You always have an equilibrium," Schatz said.
Because prices continue to show volatility and the United States buys most of its oil from foreign nations, Schatz said the way to reach economic security is for Americans to wean off using petroleum derivatives.
"It was a little tough grasping the idea," said Lucky, a Larchmont, N.Y. resident who works in the pharmaceutical industry. "I trust him."
Lucky said his wife drives an automobile that runs on diesel fuel, which topped $5 a gallon last July.
"You’ve got to put your trust in somebody. If you’re investing in something and it’s going up, there’s a risk-reward to that."
Michael D’Ambrosio, a Heritage Capital client who lives in Amherst, N.Y., has been retired government worker for about three and a half years and recommends the new investment approach.
"Energy prices were soaring for a good part of 2008 and you really couldn’t do much about it except buy stocks in an energy company," D’Ambrosio said, adding that the pain of last summer has quelled and per-barrel costs for oil and energy company stock values tumbled last fall.
"That volatility makes people feel vulnerable," he said.
Schatz said he fears that unless the country develops alternate sources of energy, oil-supplying nations would be in a position to cut off supplies in the way that Russia halted the flow of natural gas to European countries for two weeks.
Public Agenda, a nonprofit, public policy research organization in Washington, D.C., is slated to release a survey in March or early April on the public’s perceptions of energy policy, the economy and global warming trends.
Public Agenda’s 2008 Confidence in U.S. Foreign Policy Index showed that the public had "pronounced" concerns about the economy and the country’s dependence on other nations to satisfy its energy needs.
Jonathan Rochkind, research director of education insight for Public Agenda, said that through index interviews and other surveys, the organization hears anxieties similar to those voiced by Schatz.
"There is a concern that the U.S. is over-dependent on other countries for oil," Rochkind said.
Whether there could be the kind of standoff that occurred between Russia and the Ukraine, "I don’t know," he said.
Public Agenda will be releasing its next index in partnership with PBS and more information is available at www.planetforward.org.
Schatz does not charge any additional fees for the new strategy. Clients pay a transaction fee that does not go to his firm, however.
"We’ve been able to construct a portfolio that’s fully transparent. They can get in, they can get out any day they want and they can monitor it online," he said. "This helps create a happy client, a stable client."
Local banks faring best amid crisis
Author: Angela Carter Date: January 22, 2009 Publication: New Haven Register
In the financial industry, 2008 will be the year remembered for the fall of investment banking giant Lehman Brothers Holdings Inc. and Washington Mutual Inc., and ultimately for the exposure and collapse of artificially high, mortgage-backed returns on Wall Street.
The turmoil that turned the financial markets topsy-turvy continues this year, with shares of major national banks nose-diving recently as Bank of America Corp., Citigroup Inc. and State Street Corp. announced more losses this week.
Amid that national backdrop, several Connecticut-based banks will report their most recent earnings in the coming days.
Paul Schatz, president and founder of the investment advisory firm Heritage Capital LLC in Woodbridge, said Wednesday that local banks have fared the best through the meltdown.
"They learned their lesson from the savings and loan crisis of the late 1980s and early 1990s and are in the best position right now," he said.
National and international institutions had the greatest exposure to the subprime mortgage crisis, which involved pooling risky loans into securities that were then classified by rating agencies and sold to investors lured by higher-than-normal returns.
Connecticut Banking Commissioner Howard Pitkin said state-chartered banks "have excellent asset quality" and depositors have no cause for alarm because funds are sufficiently insured by the Federal Deposit Insurance Corp. Institutions will face challenges this year with respect to interest rates and market fluctuations, he said.
Three banks headquartered in Connecticut will be releasing fourth-quarter and year-end earnings reports for 2008 in the coming days, starting today with People's United Financial Corp., the holding company for People's United Bank in Bridgeport. Its report will be released after the stock market closes.
People's stock prices have ranged over the past 52 weeks from a low of $13.92 per share to a high of $21.76 per share. Its stock closed at $17.13 per share Wednesday, up $1.06 on the Nasdaq.
Waterbury-based Webster Financial Corp., the holding company for Webster Bank, is set to release its earnings Friday.
Webster's stock price has fluctuated over the past 52 weeks, as of Tuesday, from a low of $6.43 per share to a high of $34.90 per share. It closed at $6.04 Wednesday, down 45 cents on the New York Stock Exchange.
NewAlliance Bancshares Inc., the holding company for NewAlliance Bank in New Haven, will release earnings after the market closes Tuesday.
NewAlliance stock prices have gone from a 52-week low of $9.50 per share to a high of $17.98 per share, and closed at $11.25 per share Wednesday, down 8 cents on the NYSE.
Legislator addresses 'blatant class bias'
Author: Angela Carter Date: January 14, 2009 Publication: New Haven Register
HARTFORD — Someone arrested for soliciting a prostitute in a vehicle can lose their car. Someone selling drugs out of their home can face having the house seized.
But state statutes do not authorize the seizure of assets belonging to financial advisers or money managers who defraud their clients.
State Rep. Patricia A. Dillon, D-New Haven, wants that to change — this year.
“It’s a matter of justice to have some parity between white-collar crime and street crime,” Dillon said Tuesday. She wrote the legislation after hearing about the millions of dollars New York financier Bernard L. Madoff is accused of taking from investors, including his sister and clients from Connecticut.
“This strikes me as blatant class bias,” Dillon said. “White-collar criminals should not receive preferential treatment. We seize the car of a ‘john,’ but Bernie Madoff can stay in his penthouse apartment living off the savings of his victims? My legislation will address this inequity and give the victims of securities fraud hope for restitution.”
Madoff was arrested Dec. 11 for allegedly running a Ponzi scheme. The investing scam promises consistent returns at little risk. They stay afloat artificially by paying returns to earlier investors using principal payments from new investors, rather than using actual profits.
There is never enough money in the loop to pay everyone if all the investors try to withdraw their cash at the same time, so Ponzi schemes eventually collapse. They are named after Charles Ponzi, a scam artist who ran the first scheme in Boston in 1919.
Wealth manager Paul Schatz, founder and president of Heritage Capital LLC in Woodbridge, suggested that legislators consider prohibiting Madoff’s business model, because there could be little to nothing to recoup once a Ponzi scheme or some other scam fizzles.
Madoff had an ownership interest in multiple functions: the brokerage firm doing the buying and selling, the investment adviser and the custodian of investor funds.
Schatz said he plays an advisory role in his business, but uses a separate brokerage firm and investors receive statements from another party.
“I never take possession of the money. It goes to a custodian,” he said. “If I was a legislator, I would outlaw firms from owning multiple pieces of the pie.”
Dillon said that immediately seizing the assets of crooked money managers makes it more likely that, if a victim sues, there will be some money left to satisfy a judgment.
Schatz said he fears the billions that flowed through Madoff’s firm are gone. “The big question is: Where’s the money? Does his family have it? Is it offshore? I have no idea,” he said.
Top 10 financial moves for 2009
Author: LIVE INTERVIEW Date: January 04, 2009 Publication: WTNH.COM
Want to know what your next financial move should be in the New Year? Financial expert Paul Schatz was here to help this morning.
Here are Paul's top 10 moves every investor should make heading into 2009:
1. Take a financial inventory
2. Rebalance your portfolio
3. Stop chasing the winners
4. Be proactive
5. Diversify beyond just stocks and bonds
6. Add different strategies to your portfolio
7. Increase and make retirement plan contributions as early as possible
8. Focus municipal bonds on the state level
9. Ignore guru forecasts in your portfolio
10. Seek help
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Lucky & Schatz.
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