North American Auto Industry Christmas Package

From The Hoss's Mouth

Santa Claus delivers early Christmas presents to North American auto industry. President George Bush and Prime Minister Stephen Harper put on their Santa suits and provided the North American auto industry with $21 billion: $17 billion (USA) and $4 billion (Canada). Given the huge number of jobs associated with the auto industry, Hoss Cents Free Financial Money Magazine supports these loan packages.



The Hoss is concerned with President Bush's statement that part of the reason for this auto industry loan package was that he did not want to saddle the incoming President with collapse of the auto industry. Give me a break...a loan which is only good until March does not prevent the failure of the auto industry. All President Bush did was delay the crisis until March, at which time it becomes Barack Obama's problem.

Another concern The Hoss has is the refusal of labour leaders in the USA and Canada to recognize that high labour costs are a contributing factor in the disintegrating auto industry. Sure, the main problem has been the auto industries arrogance in building and forcing gas guzzlers on the public, but nonetheless, labour costs are a significant factor in the manufacturing process. For labour leaders to try and deny this does nothing to enhance their public persona.


Yes, The Hoss is aware of the grossly inflated salary and benefits the top auto industry executives receive. They too must accept severe salary and benefit reductions.

It will be interesting to see how President Elect Obama tackles this and the other financial problems left to him by outgoing President Bush. One thing for sure is that President Obama is going to have the biggest challenge any President has had to face since the Great Depression. The Hoss believes that with his fresh views and innovative ideas that he and his team will pull the American people through this economic crisis.

This will be the Hoss's last post before Christmas, so a Merry Christmas to All.

Stay on track,
The Hoss

Next Hoss Cents Free Financial Money Magazine Post:Financial Year In Review
Previous Post: Gas Prices Continue Downward

Gas Prices Continue Downward

From The Hoss's Mouth

Today, Hoss Cents Free Financial Money Magazine discusses the continuing decline in gas prices. Gas prices at the pump have been steadily decreasing over recent months. The big oil companies claim that supply and demand is what dictates the price of gas. There is much evidence to support this claim. For example, a report from the Federal Highway Administration (USA) indicates drivers in October 2008 drove 3.5 % fewer miles than in October 2007. Further, since November 2007 and October 2008, Americans have reduced their driving by 100 billion miles. These statistics clearly indicate less demand for gas.



Why are people driving less?

• History has shown that people adjust their driving habits to reduce expenses during tough economic strife and when gas prices are very high.

• In today's society, many people have the opportunity of doing much of their work from home.

• Availability of rapid transit.

• Gas prices exceed consumers' ability to pay.

The Hoss and Mrs. Hoss are prime examples. Due to the high gas prices during the summer months, we reduced our trips to and from our summer residence by 50%, which resulted in a savings of close to $1000.

All of the above supports Big Oil's claim that the law of supply and demand is the reason for continually decreasing gas prices.



The Hoss does not subscribe to this theory. He believes the oil companies have recognized that President Elect Obama is going to take the United States in a direction that is less reliant on oil. Obama's plan to introduce alternate energy sources and encourage the development of Hybrid vehicles will drastically reduce the nation's dependence on oil. But statistics repeatedly show that people don't change their energy consumption habits until they are hit hard in the pocketbook. Lower gas prices are lauded by most, especially during the current economic downturn, which the Hoss believes Big Oil is counting on. The Hoss is of the opinion that Big Oil is running scared and is reducing gas prices in an attempt to keep people from changing their current energy consumption habits, and ultimately from supporting President Elect Obama's plan toward alternate sources of energy.

The Hoss salutes President Elect Obama for his alternate energy plan. It will not only help the environment and our planet, but because of competition, it will also force Big Oil to continue with lower gas prices.


Stay on track,
The Hoss

Next Hoss Cents Free Financial Money Magazine Post:North American Auto Industry Christmas Package
Previous Post:Be Gone Dion

Be Gone Dion

From The Hoss's Mouth

Oh, what a difference a week makes. Last week at this time, Hoss Cents Free Financial Money Magazine, posted information regarding a three party coalition made up of the Canadian Federal Liberal and NDP parties along with the separatist party Bloc Québécois. The head of this group was to be Liberal leader Stéphane Dion.





Their objective was to oust the Canadian Conservative party with a vote of no confidence. Then they were to ask the Governor General of Canada Michaëlle Jean to install this coalition as the official Canadian Government with Stéphane Dion the Prime Minister of Canada.

Today Mr. Dion is neither the Prime Minister of Canada nor is he the Leader of the Liberal Party. He was forced to resign as Leader of his party as a result of some clever strategic moves but the Conservative party and Dion's subsequent catastrophic nationally televised video tape.

The Conservative party out maneuvered the coalition. Prime Minister Harper, prior to the opposition being able to pass a vote of no confidence in the House of Commons, asked the Governor General to prorogue parliament until Jan 27, 2009. She agreed.

Mr. Harper and the Conservative party may have made a tactical mistake by not asking the Governor General to dissolve Parliament and set an election date. Numerous polls have indicated that the conservatives would have been returned with a majority government.

Not withstanding the fact that all Liberal members of the House of Commons signed a document in support of the coalition, it now appears the coalition is doomed as many of the Liberals have indicated they no longer support the alliance.

Michael Ignatieff appears the likely successor to Mr. Dion as Liberal Party Leader. Only time will tell if he turns out to be a superior leader than Mr. Dion. The Hoss predicts Mr. Ignatieff will not only ensure his party retreats from the coalition, but also claim it was a bad idea to begin with.

Ok, now for the important stuff. I can here you now, what is the Hoss doing writing about politics? This is supposed to be a financial money magazine. Well, let me put it this way, when the USA sneezes Canada gets the flu. In other words, given the current financial crisis in the good old US of A and the overall global economic situation, Canada cannot afford the current political turmoil and subsequent instability without our economy catching pneumonia.

Stay on track,

The Hoss


Next Hoss Cents Free Financial Money Magazine Post: Gas Prices Continue Downward

Previous Post:CanadianCoup d'état

Canadian Coup d'état

From The Hoss's Mouth

In what amounts to a legal Coup d'état, Canadian opposition parties are forming a coalition to over throw the Canadian Government of Prime Minister Stephen Harper. Hoss Cents Free Financial Money Magazine discusses this unprecedented grab for power by Liberal leader Stéphane Dion.




The Canadian Parliamentary system requires that the governing party have the confidence of the House of Commons. If the Government is defeated, The Governor General essentially has two options: dissolving Parliament and sending Canadians to the polls, or finding a new government that does have the confidence of the House.

The makeup of the Canadian House of Commons following the recent election is as follows:
The Conservatives have 143 seats, Liberals 77, NDP 37, Bloc Québécois 49.

The Liberals and NDP do not have enough seats in the House of Commons to form a coalition, so what do they do? Why they invite the Bloc Québécois (the party whose only purpose for existence is to separate from Canada) to join their coalition. This gives the coalition a total of 163 votes and enough to pass legislation. One wonders what concessions have been made to the Bloc in order to gain their co-operation.

Who do they choose to lead this coalition? The leader who, just seven weeks ago, led his party to its lowest share of votes ever and is scheduled to be replaced by his own party in the spring. Yes, Stéphane Dion, will be Canada's next Prime Minister. Who do we have to thank for this dubious honour? Jack Layton of the tax and spend NDP party and Quebec's Separatist party the Bloc Québécois .

The Hoss does not believe this is what the Canadian voters had in mind when they cast their ballots in the last election. The news of this unlikely coalition appears to have spooked the Canadian stock market, which suffered its largest single day drop ever.
Stay on track,

The Hoss

Next Hoss Cents Free Financial Money Magazine Post: Be Gone Dion

Previous Post: Michael Moore on the Auto Industry

Michael Moore on The Auto Industry

From The Hoss's Mouth

Michael Moore was Larry King's guest on CNN last Wednesday (Nov 19th) regarding the current auto industry crisis. Hoss Cents Money Magazine reviews the comments made by the renown filmmaker.

Moore does not accept the claim by the CEO'S of GM, Ford and Chrysler that the downturn in the economy is the cause of the auto industry's problems. He contends that the true reason for shrinking auto sales is the type of gas guzzling vehicles American auto makers have been producing and forcing on the American public. According to Moore, today's consumer is sophisticated and not prepared to accept being told what to buy, rather they recognize that hybrid vehicles not only save them money but also are more environmentally friendly than an SUV.





The effect of one or all of the big three American auto manufacturers going out of business would be devastating. The big three employ about 266,000, the auto dealerships 740,000, and the auto supply industry about 610,000, for a total of about 1.6 million people directly associated with the auto industry that would loss their jobs. Moore sees this crisis leading to "the end of capitalism as we know it."

He suggests as a solution a similar approach to the one Roosevelt took during World War II. The auto makers were ordered to stop making cars and to produce items needed for the war effort. Similarly, Moore proposes the auto industry be provided the loan they request, but on the condition that they produce rapid transit vehicles and non gas guzzling hybrids, as well as other energy efficient automobiles. "After all," he said, "if you provide $25 billion for me to make a movie, you own the movie, not me." This would keep the auto industry and all its associated businesses afloat, with the added benefit of more efficient transportation methods and a reduced negative effect on the economy.



The Hoss agrees with Michael Moore. Just a footnote: Can you believe the arrogance of these CEO's? They arrive in Washington in their private luxury jets, asking for a handout. That's like driving a Cadillac to the welfare office to pick up your welfare check.

Stay on track,

The Hoss

Next Hoss Cents Free Financial Money Magazine Post: Canadian Coup'deat

Previous Post:Tax Free Savings Account

Tax Free Savings Account

From The Hoss's Mouth

The Tax Man Gets Every Penny

Hoss Cents Free Financial Money Magazine applauds the Canadian Government for the introduction of the Tax Free Savings Account (TFSA). Effective in 2009, Canadians 18 years or older will be able to contribute up to $5000 per year to a TFSA. These accounts can be in the form of mutual funds, stocks, bonds and GICs.

Given the state of today's economic crisis, the Tax Free Savings Account will provide a much needed incentive for investors to continue to invest their savings and not run for the hills with their money.

Take a look at these highlights.

• All income earned in a TFSA, including capital gains will not be taxed even when withdrawn.

• Unused contribution room can be carried forward to future years

• Any funds withdrawn can be put back in at a later date without reducing your contribution room

• Federal income-tested benefits and credits will not be effected by a TFSA

• You can contribute to a spouse's TFSA.

• Assets can be transferred to a spouse upon death
  

The Hoss and Mrs. Hoss will have to replace the roof put on our house within the next few years. Over the next two years we can redirect $20000 of our current investments into TFSA ($5000 each per year).

This will be more than enough to pay for our roof. We can then withdraw the money from our TFSA (with no penalty) pay for the roof and then again redirect some of our current investments to top of our TFSA to $20000.

The Government of Canada has provided a tax free savings account calculator at
Tax Free Savings Account Calculator

You can use this tool to calculate your estimated tax savings. For example the Hoss and Mrs Hoss, each making a maximum $5000 per year contribution over the next 10 years with an estimated return of 5% will save a total of $6802.

This makes the Tax Free Savings Account a valuable savings tool for all Canadians and may help ease some of the concerns caused by the current economic crisis.


Stay on track,

The Hoss

Next Hoss Cents Free Financial Money Magazine Post: Michael Moore On The Auto Industry

Previous Post:Auto Industry Crisis

Auto Industry Crisis

From The Hoss's Mouth

The auto industry crisis is reviewed in today's Hoss Cents Free Financial Money Magazine.



The wheels are falling off of the auto industry.

On Friday, General Motors Corp. and Ford Motor Co. reported massive third quarter losses.
GM reported a loss of 25 billion dollars US in the third quarter and stated they would cut 3,600 jobs. Yes, you read it correctly, that is billion not million dollars.

GM has indicated that there is a good possibility that they could run out of cash in 2009 if economic conditions do not improve.

The auto industry crisis is wide spread. Ford reported losses of $129 million and Chrysler's problems are well known and reported in numerous money magazines.

Several news reports indicate Ford plans to cut somewhere between 500 to 2000 white collar jobs in North America.

This dire economic situation has prompted the auto industry to request $50 billion in low cost loans. This is in addition to the 25 billion in loans that Congress passed in September 2008 to help re-tool auto plants to build more fuel-efficient vehicles.

Speaking in Chicago at his first new conference, President Elect Barack Obama indicated that the Bush administration remains in charge of government until his inauguration. However, he and his transition team are looking at ways to help the auto industry. He urged the Bush administration to "do everything it can" to accelerate the distribution of the $25 million approved in September.

Obama stated: "Immediately after I become President, I will confront this economic crisis head-on by taking all necessary steps to ease the credit crisis, help hardworking families, and restore growth and prosperity."

The Hoss does not envy the task that confronts President Elect Obama. The current economic situation is serious and will require fresh and innovative ideas to solve the auto industry crisis. A complete overhaul of the financial system may be required. The result may be something that does not even come close to today's economic models. Money as we know it may become obsolete.

Stay on track,

The Hoss


Next Hoss Cents Free Financial Money Magazine Post: Tax Free Savings Account

Previous Post:Obama or McCain

Obama or McCain

From The Hoss's Mouth

Today, Hoss Cents Free Financial Money Magazine endorses Barack Obama for President of the United States of America. The Hoss has closely watched the Presidential election campaign and has come to the conclusion that Barack Obama is the best choice to be President of the United States.

It is clear that Obama and McCain have well defined differences on such election issues as:

• Economy

• Health Care

• Education

• Taxes

• War in Iraq

• Energy

• Environment

• Free Trade

• Foreign Policy

• Abortion

Although The Hoss's philosophy is closer to that of Obama than McCain, he recognizes that supporting any candidate based only on their election platform can be a problem. Once elected, many unknown factors could and do crop up which severely limited the ability of the elected candidate to carry out election promises.

Furthermore, no one person can be expected to solely govern the United States of America. The President Elect must have the ability to select an administration that will govern the United States with the best interest of the American people.

With this in mind, The Hoss decided to not only consider each platform but also evaluate Obama and McCain's election campaign and determine which candidate demonstrates the best ability to select a team of people capable of working together towards a common goal.

McCain's choice for Vice President (Palin does not inspire confidence), the much publicized in-fighting of his campaign staff (calling Palin a "Divvia"), and failure to coordinate attendees at rallies (Joe the Plumber a no-show) clearly indicate a lack of leadership.

Obama and his staff have far out-performed McCain during this campaign. Obama has demonstrated leadership ability beyond his years. The Hoss believes Barack Obama has shown he is capable of selecting an administration that can work together for the greater good. McCain has not.

The Hoss is proud to support Barack Obama for President of the United States.

Stay on track,

The Hoss


Next Hoss Cents Free Financial Money Magazine Post: Auto Industry Crisis

Previous Post:Index Mutual Funds

Index Mutual Funds

From The Hoss's Mouth

Index mutual funds are a favorite of Hoss Cents Free Financial Money Magazine. In fact most money magazines will recommend index mutual funds to both the novice and experienced investor.



Index mutual funds reflect the performance of the index market they represent. This could be a bond market index or stock market index such as Dow Jones or Nasdaq, or in Canada the Toronto Stock Exchange (TSE) or Venture Exchange.

Numerous studies comparing actively managed mutual funds with index mutual funds have consistently shown the index mutual fund as having the best performance.

How is this possible? Index mutual funds are managed to mirror the performance of a published index . It is a relatively simple matter to develop a computer model that tracks a particular index and recommends adjustments in an index fund to match the index it is tracking.

Generally speaking actively managed mutual funds are required to make more trades than index funds and therefore incur higher trading costs. In addition actively manged mutual funds have higher research costs than do index funds. All of these extra costs incurred by an actively traded mutual fund reduce the profits of that fund. Not to mention that market timing is not an exact science and often produces losses rather than gains.

Diversification is the key to financial success and investing in index mutual funds enables you to maintain your portfolio balance with relative ease. Lets say you are a conservative investor with a portfolio balance of 70% fixed income (bond, money market index) and 30% in equities(Dow Jones or other equity index). Interest rates tumble and as a result your fixed income is now 60% of your Portfolio and equities are 40%. It is a simple matter for you to sell some of your equity index fund and purchase more fixed income index fund to obtain your original 70-30 balance. In addition if you hold these index mutual funds within the same fund company you may be able to switch the balance without cost and in some cases the fund company will set up a periodic automatic rebalance at no charge to you.

I am sure you can now understand why index mutual funds are a favorite of Hoss Cents Free Financial Money Magazine. The recent heavy decline in all market index's provides a buying opportunity. Remember buy low, sell high.

Stay on track,

The Hoss

Next Hoss Cents Free Financial Money Magazine Post: Obama or McCain
Previous Post: Green Mutual Fund Investing

Green Mutual Fund Investing

From The Hoss's Mouth

Today, Hoss Cents Free Financial Money Magazine discusses Green Mutual Fund Investing.

There are many mutual funds that are called green, ethical, socially responsible, or that support a clean environment. In many cases a close look at their investment portfolio will reveal investments in companies one would not normally consider "Green." Why then do they bill themselves as a green mutual fund? Because they invest in companies that have socially responsible business practices. A simplified prospectus of such funds would state that the fund invests primarily in companies that:

• show leadership in environmental practices

• are committed to complying with environmental regulations

• respect workers' rights

• encourage equal employment opportunities

• adhere to strong corporate governance practices

• do not support the acts of repressive regimes

Further, the prospectus may also detail companies whose securities the fund intends to avoid because they produce, promote or distribute:

• alcohol

• tobacco

• gaming

• military weapons

• pornography

Did you notice the use of the word primarily rather than exclusively and intends rather than will. The Hoss is not trying to criticize these funds, many of which are managed expertly by environmentally conscious people, and have a relatively high exposure in green. He is pointing out that to find a stand-alone or purely Green Mutual Fund will require close scrutiny of the fund's prospectus and of the companies it holds in the fund.

If the investing public demands purely Green Mutual Funds, then we will see the development of such funds alongside the current socially responsible green mutual funds.

Stay on track,

The Hoss

Next Hoss Cents Free Financial Money Magazine Post: Index Mutual Funds

Previous Post: Equity Mutual Funds

Equity Mutual Funds

From The Hoss's Mouth

Equity mutual funds are spotlighted in today's Hoss Cents Free Financial Money Magazine. What is an equity mutual fund? You will no doubt remember from the Hoss's money magazine previous post, types of investments, that equities are stocks. Equity mutual funds are simply funds that invest in stocks.

In horse racing a trainer has a choice of entering his horse in sprints, middle distance or long races. He can also choose to run on a grass or dirt track or a grass track one time and a dirt track the next. Similarly, equities have various capitalization (cap)sizes from which to choose and different investment styles to utilize when purchasing equities for a mutual fund.

S/he can choose a value, growth or blend investment style when purchasing stocks for the mutual fund he manages and he can pick between companies that have a small, medium or large cap.

Value Investing: An investment style that utilizes detailed research (called bottom-up) to identify companies that for whatever reason are currently (in the opinion of the fund manager and staff) undervalued. The late John Templeton was a value investor. At the time of this posting there are at great number of stocks undervalued.

Growth Investing: Here the mutual fund manager also utilizes the bottom-up approach to obtain an in depth analysis of individual companies. But rather than pick companies that appear undervalue S/he chooses companies that are in currently in favour and growing rapidly. These stocks come at a high price because of their growth and success and potential for continued positive returns.

Blend Funds: A wide open style of investing. The fund manager could invest in conservative, high risk or specific sector stocks. S/he will usually purchase a large number of stocks in sectors of the economy they expect will increase in value.

The Hoss hopes you find some value (pun intended) in today's post. Remember whatever mutual fund(s) you purchase whether it is an equity mutual fund or otherwise make sure the mutual funds investment style compliments your investment goals and risk assessment.

Stay on track,

The Hoss

Next Hoss Cents Free Financial Money Magazine Post: Green Mutual Fund Investing

Previous Post: Alternative Energy Mutual Funds

Alternative Energy Mutual Funds

From The Hoss's Mouth

Hoss Cents Free Financial Money Magazine explores Alternative Energy Mutual Funds. The alternative energy mutual fund is a relatively new type of mutual fund which has developed due to the world wide demand for renewable energy sources.

The world's current nonrenewable energy sources such as coal, oil, and natural gas are being depleted and alternate energy sources must be harnessed and utilized. Alternate energy mutual funds invest in projects such as:

Solar Power: Solar panels are used to harness the sun's energy and convert that energy to electricity. An environmental friendly way of producing electricity.

Wind Power: The Hoss is sure you have all seen the gigantic wind turbines dotting the landscape in areas where wind is plentiful. Although science has not yet developed a method to harness the wind produced by politicians, it has successfully managed to produce energy from the wind produced by Mother Nature.

Ocean Power: The energy produced by ocean currents and waves is utilized to power turbines and produce clean renewable power.

Hydro Power: The old standby that has been capturing the power of water behind dams and then using that water to power generators. Another very clean source for power.

Geothermal Energy: The heat stored by Mother Nature below the earth service is converted to power and/or used as a source of heat for the home.

Other alternate energy sources: include but are not limited to fuel cells, hydrogen, biomass and simple energy conservation techniques

The Hoss, will do his small bit towards conserving energy by keeping this post concerning alternate energy mutual fund investing short and concise.

Stay on track,

The Hoss

Next Hoss Cents Free Financial Money Magazine Post: Equity Mutual Funds

Previous Post: The Financial Crisis and You

The Financial Crisis and You

From The Hoss's Mouth

Hoss's Money Magazine answers the question: How does the financial crisis affect me?
Well, if you have a good credit rating, no mortgage and a steady job, probably not very much other than a reduction in the value of your retirement and/or investment plans.

On the other hand, if you are like the majority of the people, and from time to time require a loan to finance a new car, mortgage or home repairs/alterations you may not be able to obtain a loan, even with a good credit rating. Bank's can no longer lend money without using stringent guidelines that clearly indicate the borrower(s) will not default on the loan.

The Hoss and Mrs. Hoss live in a Bare Land Strata Complex with by-laws that provide for the control, management, maintenance, use and enjoyment of the strata lots, common property and common assets of the strata corporation and for the administration of the strata corporation.

What has that got to do with the financial crisis? The Hoss will explain. Our Strata has a by-law that requires roof replacements be done with cedar shakes or a very specific type of rubber roof. Nothing else is permitted, period. These types of roofs are considerably more expensive to install than either asphalt or fibreglass composite shingles, as much as $5,000 more.

Many owners may have to obtain a loan to have his/her roof replaced. Unfortunately, because of the high cost, they may not be able to obtain the necessary loan.

So what was the response of some Strata Council members when a proposal was brought forward to permit a verity of roofing materials as long as a uniform color was maintained? "I do not want my view spoiled. I bought in here because it is a 'high end complex'. If they cannot afford a cedar roof, tell them to move." Fortunately, there are some forwarding-thinking people on Council, and it now appears they will attempt to progress this matter and find an acceptable roofing alternative that is a reasonable cost.

As it stands now, an owner without the financial means to replace their roof with cedar will have to move, or ignore the by-law and risk being taken to court by Council to have the roof removed.

The Hoss struggled with the thought of using a real life situation to illustrate what effect the current financial crisis has on the average person--or if you prefer, the middle class--but in the end, decided this type of example would be of the most value to his readers.

Stay on track,

The Hoss

Next Hoss Cents Free Financial Money Magazine Post: Alternate Energy Mutual Funds

Previous Post: Bond Mutual Funds

Bond Mutual Funds

From The Hoss's Mouth

Hoss Cents Free Money Magazine takes a look at Bond Mutual Funds (BMFs) in todays post. Bond mutual funds are a fixed income fund. The BMF manager has two basic styles to choose from when purchasing for the fund. S/he may elect spread trading, which is a conservative approach or s/he may choose an interest rate anticipation style. The other option for a BMF manager is a blend of spread trading and interest rate anticipation.

Spread Trading: The Bond Mutual Fund manager takes advantage of small or large yield changes in bonds to enhance the profits of the fund. Remember that BMFs have multi-million dollar assets and are able to take advantage of day to day yield fluctuations. Of course the bonds also accumulate interest which is paid to the fund and hence the bond mutual fund investor.

Interest-rate anticipation: Means exactly what it says. The fund manager uses various strategies and analysis to anticipate fluctuations in interest rates. Bond purchases are made on the basis of these analysis.

If the mutual bond fund manager believes interest rates will rise s/he will purchase short term bonds because they are the least effected by interest rates and can be easily sold to purchase bonds with a higher yield. If s/he foresees an interest rate drop s/he will purchase long term bonds and will benefit not only from the bond interest rate but also from the increase in value of the bond itself. (Remember that when interest rates go down bond prices generally rise).

Blend: This strategy is used often when a fund, which has a number of long term bonds in its portfolio, resorts to spread trading because the bond mutual fund manager has anticipated a decline in interest rates and needs to make adjustments in order to maximize profits. Some bond mutual fund managers will use what is referred to as a "barbell" strategy. This strategy combines a portfolio of long term bonds , short term money market holdings and no intermediate term bonds. This is very profitable when short term interest rates rise and long term rates decrease.

The Hoss reminds you that the MER of a bond mutual fund reduces the funds profits and given today's low interest rates it may be wise for the invester to evaluate whether or not the outright purchase of bonds would be more profitable than purchasing a bond mutual fund.

Stay on track,

The Hoss

Next Hoss Cents Free Financial Money Magazine Post: The Financial Crisis and You

Previous Post:Money Market Funds

Money Market Funds

From The Hoss's Mouth

Money Market Funds are featured in today's Hoss Cents Free Financial Money Magazine. Money market funds are a safe hitching post to park your cash. Income or growth potential is very low but in times of unstable stock markets they are a good place for your money.

Money Market Funds are appropriate for the investor who wants liquidity, stability of capital, and an interest income higher than savings accounts. If you and your financial adviser have determined that you have a very low risk tolerance level, a MMF would be perfect for you.

When shopping for a Money Market Fund, you and your financial adviser should consider no-load funds only. The returns on money market funds do not vary much, so The Hoss cannot see any advantage to purchasing a commission-based Money Market Fund. Also, closely review the fund's expenses, which are outlined in the prospectus.

The investment objectives of most money market funds are to preserve capital and provide a steady level of income for the investor. It is the intention of the fund company to maintain the per unit price at a constant level, usually ten dollars, but the prospectus may contain a clause that states there is no guarantee that the unit price will not fluctuate.

Money market funds usually invest in a well diversified portfolio of short term securities such as, government or government guaranteed treasury bills (T-Bills), asset-backed commercial paper, certificates of deposit, and bankers acceptances. The funds are conservatively managed, and the average term to maturity varies, but never more than 364 days.

Distribution of interest earned is paid monthly and can be deposited directly into your bank account, paid by cheque, or reinvested in units of the fund. Most fund companies will automatically reinvest in units of the fund unless otherwise directed by the investor.

To sum up, you will not make a large return from a money market fund, but your money is relatively safe and can be accessed quickly.

Stay on track,

The Hoss

Next Hoss Cents Free Financial Money Magazine Post: Bond Mutual Funds

Previous Post: How Do Mutual Funds Work Management Expense Ratio

How Do Mutual Funds Work Management Expense Ratio

From The Hoss's Mouth

Hoss Cents Free Financial Money Magazine: How Do Mutual Funds Work? There are many elements to the effective workings of mutual funds(MFs): Management Expense Ratio (MER) is one such element.

MFs, just like a horse race stable, have management and operating costs. Generally, these expenses are charged directly to the fund. All the expenses charged to a MF are contained in the MER. The MER is expressed as a percentage of the fund's assets. A 100 million dollar MF with a MER of 1% would have management expenses of $1,000,000, which would be subtracted from the fund before dispersement. However, that same 100 million dollar fund with a MER of 2% would have management expenses of $2,000,000. The MER has a huge impact on returns , so The Hoss suggests you carefully review the MER before purchasing.

The fees in the MER include, but are not limited to :

* Management Fees: payment to the manager for his/her expertise in managing the fund

* Legal Fees

* Accounting Fees

* Custodial Fees: paid for establishing, promoting and maintaining the MF

* Service Fees: paid to advisers and their firms


Trading costs are hidden fees not included in the MER and must be taken into consideration when asking: How do mutual funds work? Trading costs are the brokerage or commission fees paid for the purchase and sale of the fund's stocks and bonds. These fees are contained within the price of the securities and therefore not visible to holders of the fund. The total trading costs varies depending on how active the MF manager is in trading the fund's stocks and bonds. They are one of the largest expenses a fund has, and it would be inappropriate to ignore this cost in answering the question: How do mutual funds work?


The Small Print:

MFs have other costs that may or may not apply to the fund you are purchasing.

* Set Up Fees: Typically charged by no-load funds and is a one-time fee. Price varies from fund to fund.

* Trustee Fees: Some fund companies charge these fees for registered funds.

* NSF Cheque Charges: If you invest monthly by post-dated cheque you may have a service charge, and if the cheque bounces, expect to pay a penalty.

* Automatic Withdrawal: Some investors choose to receive regular income from their fund and set up an automatic withdrawal. You may be charged either an annual fee or a fee for each withdrawal.

* Switching Fees: Most MF companies permit switching from one fund to another within the same mutual fund company. The wise investor will check and see if fees are charged for this privilege.

* Close-Out Fees: You may be charged a fee to close out your account or transfer to another MFcompany.


At the risk of repeating myself, one must also consider the above fees and charges when one is asking: How do mutual funds work?


The next series of posts from The Hoss will demonstrate various types of mutual funds and the investment strategies employed by these mutual funds.


Stay on track,
The Hoss

Next Hoss Cents Free Financial Money Magazine Post: Money Market Funds

Previous Post: Green Party in Canadian National Debate

Green Party in Canadian National Debate

From The Hoss's Mouth

Hoss Cents Free Financial Money Magazine salutes the Canadian electorate. Initially, federal Green Party leader, Elizabeth May, was to be excluded from the federal leaders' nationally televised debates Oct 1, and Oct 2, 2008. The Canadian public inundated the other political parties and the media with phone calls and e-mails to express their outrage. Canadian's were not going to stand for this discrimination.

Gilles Duceppe of the Bloc Quebecois, who to his credit never did threaten to boycott the debate even though his party opposed the inclusion of the Green Party leader, maintained he always encouraged the participation of Ms. May.

Stephane Dion of the Liberal Party was first to reverse his position and welcome Ms. May to the debate. He was quickly followed by Conservative leader Stephen Harper, and NDP leader Jack Layton.

Stephen Harper originally opposed Ms. May's participation because of her often-stated preference for Liberal leader Stephane Dion.

Jack Layton's own party members were upset at his threatened boycott. After all, they like to be referred to as the party of the "working class". He finally recanted, saying the issue was becoming a distraction.

Why Stephen Harper originally opposed her participation is beyond me. Let's face facts here, the most likely parties to suffer vote drainage at the hands of the Green Party are the Liberals and NDP. They both have a stronger environmental platform than the Conservatives. Stephen Harper should have encouraged her inclusion in the debate from the outset, and not only because it is the right thing to do; but because doing so is likely to have the effect of increasing his chances of obtaining a majority government.

In any event, The Hoss is thrilled the will of the people won out and the Green Party leader will take part in the upcoming debates.

By the way, what were the Canadian networks thinking, scheduling a debate the same night as an American Presidential election debate? That's like running the Kentucky Derby and Queen's Plate on the same day. It's just not done.

Stay on track,

The Hoss

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Previous Post: Canadian Federal Election

Canadian Federal Election

From The Hoss's Mouth

Hoss Cents Free Financial Money Magazine now has two major elections to cover. Canada and the United States are running concurrent national elections. Canadian Prime Minister Stephen Harper called a Canadian federal election for Oct. 14, 2008. This came as no surprise to Canadians; ads soliciting votes for Stephen Harper were appearing on TV days before the election call.

So what is the Hoss to do? He has already started a series on the American presidential election with posts on:

Democratic National Convention

Obama and McCain Health Care Plans

Obama and McCain Economic Plans

The Canadian federal election will be over nearly a month before the American presidential election, so, The Hoss will concentrate his efforts on that election. He will keep an eye on the American presidential election and provide updates of significant events in that race.

Canada has four major political parties (Conservatives, Liberals, Bloc Quebecois, NDP [New Democratic Party]) and one relatively new but important kid on the block: The Green Party. Though The Green Party is just getting started, they may take enough votes away from the Liberals and/or NDP to allow the Conservatives to form a majority government. Current House of Commons standings:

Party	Leader	Seats
Conservative	Stephen Harper	127
Liberal	Stephane Dion	95
Bloc Quebecois	Gilles Duceppe	48
NDP	Jack Layton	30
Green	Elizabeth May	0
Independent		4
Vacant		4

The Canadian Parliament has a total of 308 seats. To win a majority, a party must win at least 155 seats.

Anything less results in a minority government, which the opposition could defeat at any time.

Stephen Harper is the current Prime Minister and has been operating with a minority government since the last Canadian Federal Election

The Hoss suspects Mr. Harper called this election on the basis of internal polls which may suggest now is his best opportunity to obtain a majority government. The leader of the Liberal Party, Stephane Dion, does not appear to be making friends with the Canadian people; he has promised a carbon tax on gas which is the last thing most Canadians want: yet another gas tax. The NDP have a solid core of supporters, but nowhere near enough to form a government. And the Bloc Quebecois is only in Quebec, but can--and has in the past--won enough seats to become the official opposition.

So the starting gate is open and the race is underway. Being only six weeks long, this race is a sprint to the finish with the winner having his photo taken as Prime Minister of Canada.


Stay on track,

The Hoss


Next Hoss Cents Free Financial Money Magazine Post: Green Party Allowed in All-Party Debate

Previous Post: Obama and McCain Economic Plans

Obama and McCain Economic Plans

From the Hoss's Mouth

Hoss Cents Free Financial Money Magazine provides the highlights of the economic plans of presidential candidates Barack Obama and John McCain. For comprehensive details on the implementation and characteristics of these plans, visit the respective Obama and McCain websites.

Barack Obama’s Economic Plan

Homeowner Protection:

• Protect homeownership and crack down on mortgage fraud
• Ensure more accountability in the subprime mortgage industry
• Mandate accurate loan disclosure
• Create fund to help homeowners avoid foreclosures
• Close bankruptcy loophole for mortgage companies
• Create a universal mortgage credit

Taxes:

• Provide middle class Americans tax relief
• Provide a tax cut for working families
• Simplify tax filings for middle class Americans
• Create the American Opportunity Tax Credit
• Expand the Child and Dependent Care Tax Credit

For Seniors:

• Strengthen retirement security
• Eliminate income taxes for seniors making less than $50,000
• Create automatic workplace pensions
• Expand retirement savings incentives for working families

Credit Cards:

• Address predatory credit card practices
• Create a credit card rating system to improve disclosure
• Establish a credit card bill of rights to protect consumers
• Ban unilateral changes
  
• Apply interest rate increases only to future debt
• Prohibit interest on fees
• Prohibit “Universal Defaults”
• Require prompt and fair crediting of cardholder payments

Stimulate Economic Growth:

• Fix the health care crisis in America
  
• Invest in U.S. manufacturing
• Create new job training programs for clean technologies
• Boost the renewable energy sector and create new jobs
• Fight for fair trade
• Invest in the Sciences
• Make the Research & Development Tax Credit permanent
• Deploy "Next-Generation Broadband"
• Improve transparency in the market
• Investigate potential conflict of interest between credit rating agencies and financial institutions

John McCain’s Economic Plan

Bring the budget to balance by 2013 with a three-step process:

1. Provide For Reasonable economic growth

• Low individual tax rates
• Low tax rates on dividends and capital gains
• Minimize expensive mandates
• Keep jobs here
• Lower corporate tax rate
• Improve investment and research incentives
• Reduce federal borrowing

2. Institute comprehensive spending controls

• One-year spending pause; freeze non-defense, non-veterans discretionary spending
  
• Comprehensive review of all spending programs
• Take back earmark funds

3. Eliminating wasteful spending

• Stop earmarks, pork-barrel spending, and waste
• Eliminate broken government programs
• Reform civil service system
• Reform procurement programs
  
• Reform Social Security:
• Control Medicare growth

The Lexington Project highlights:

• Increase domestic exploration of oil and natural gas
• Build 45 new nuclear power plants by 2030
• Research that will allow the clean use of coal

Controlling health care costs:

• Provide $5,000 for health insurance to every American family
• Safe re-importation of drugs and faster introduction of generic drugs
• Federal research into treating and curing chronic disease
• Coordinated care
• Greater access and convenience
• Information technology improvement
• Reform the payment systems in Medicaid and Medicare
• Promote the availability of smoking cessation programs
• Improve transparency
• Provide Tort Reform

Taxes:

• Keep tax rates low
• Keep the top tax rate at 35 percent
• Maintain the 15 percent rates on dividends and capital gains
• Phase-out the Alternative Minimum Tax
• Cut the corporate tax rate from 35 to 25 percent
• Allow first-year deduction or "expensing" of equipment and technology investments
• Establish permanent tax credit equal to 10 percent of wages spent on Research & Development
• Reduce the estate tax rate to 15 percent with a $10 million exemption
• Ban Internet taxes
• Ban new cell phone taxes

Immediate relief for American families:

• Suspend the 18.4-cent federal gas tax and 24.4-cent diesel tax from Memorial Day to Labor Day
• Implement policies to increase the value of the dollar
• Repeal tax on imported sugar-based ethanol
• Roll back corn-based ethanol mandates
• “Home Plan” to assist those caught in the mortgage crisis
• Propose a student loan continuity plan

Mrs. Hoss insists that The Hoss provide links for those of you who would like to explore these economic plans in depth, so here they are:

Barack Obama Economic Plan

John McCain Economic Plan


Stay on track,

The Hoss

Hoss Cents Free Financial Money Magazine Next Post:Canadian Federal Election
Previous Post: Obama and McCain Health Care Plan

Obama and McCain Health Care Plans

From The Hoss's Mouth

Hoss Cents Free Financial Money Magazine turns its attention to the Obama and McCain presidential election. The Hoss has researched both Obama and McCain campaign literature. Each candidate has a clearly defined and opposing view. Over the next several weeks, The Hoss will provide information on the key issue's important to the public. He will provide summary information on Obama's and McCain's plans for health care, education, taxation, and military strategy.


The winner of this presidential election will have a huge impact on the direction of the American economy over the next four years. The Hoss hopes the information he provides will help you to vote for the candidate whose values are closest to your own, whether that be Barack Obama or John McCain.


Onto the issue at hand...health care in the United States costs over $2 trillion a year. The Hoss has provided a summary of each candidate's health care plan below, which is by no means a complete picture. For detailed information, The Hoss suggests you visit their respective websites.


Barack Obama: According to Obama's website, he has a three part plan to improve the U.S. health care system:


(1) Provide affordable, comprehensive and portable health coverage for every American:

• Guaranteed eligibility
• Comprehensive benefits
• Affordable premiums, co-pays and deductibles
• Simplify paperwork and rein in health costs
• Easy enrollment
• Portability and choice
• Quality and efficiency
• National health insurance exchange
• Employer contributions
• Mandatory coverage of children
• Expansion of Medicaid and SCHIP (State Children's Health Insurance Program)
• Flexibility for state plans

(2) Modernize the U.S. health care system to contain spiraling health care costs and improve the quality of patient care:

• Reduce costs of catastrophic illnesses for employers and their employees
• Lower costs by ensuring patients receive quality care
• Support disease management programs
• Coordinate and integrate care
• Require full transparency about quality and costs
• Ensure providers deliver quality care
• Promote patient safety
• Align incentives for excellence
• Utilize comparative effectiveness reviews and research
• Tackle disparities in health care
• Reform medical malpractice while preserving patient rights
• Lower costs through investment in electronic health information
• Improve technological systems
• Lower costs by increasing competition in the insurance and drug markets
• Increase competition
• Drug re-importation
• Increase use of generic medications
• Lower Medicare prescription drug benefit costs

(3) Promote prevention and strengthen public health, to prevent disease and protect against natural and man-made disasters.


John McCain: According to McCain's website, his health care plan will provide better health care at a lower cost for every American. He has listed the following initiatives:

• Provide cheaper drugs
• Provide initiatives to reduce chronic disease
• Provide coordinated care
• Improve access and convenience
• Deploy information technology
• Reform Medicaid and Medicare
• Promote the availability of smoking cessation programs
• Tort reform. Fight for medical liability reform that eliminates lawsuits directed at doctors who follow clinical guidelines and adhere to proven safety protocols.
• Improve transparency
• Reforms to make health insurance innovative, portable and affordable
• Health care costs: Make it easier for individuals and families to obtain insurance
• Make the Tax Subsidy fair
• Make insurance more portable

Again, The Hoss reminds you this is a summary of the health care plans of Obama and McCain. Details of how each intends to achieve these goals can be found on their respective websites.


Stay on track,

The Hoss


Hoss Cents Free Financial Money Magazine Next Post: Obama and McCain Economic Plans
Previous Post: How do mutual funds work the loads

How Do Mutual Funds Work The Loads

From The Hoss's Mouth

How do mutual funds work? In today's post Hoss Cents Free Financial Money Magazine will answer that very question, in particular, with regard to their load charges: front-end, back-end and no-load funds. MER (management expense ratio) will be detailed in the next posting of Hoss Cents.

Funds have two types of charges. Those that you see and those that you don't see. Load charges are the obvious costs that you see. Management fees are those costs that you don't see, but they are taken into account and reported as the management expense ratio (MER). Both have an impact on your funds' bottom line performance.


How Do Mutual Funds Work: "Front-End Loads":

When you purchase a front-end load mutual fund, you agree to pay a certain percentage of your total investment as the sales charge, also known as the commission. If you have $10,000 to invest and agree on a 3% commission, then the total that is actually invested in the mutual fund is (10,000 - 300) = $9,700. Every dollar you pay in commission has a negative effect on your bottom line. The Hoss suggests that you shop around before purchasing a front-end load mutual fund. Front-end load mutual funds do not charge a redemption fee, but they may charge a close out or switching fee.

How Do Mutual Funds Work: "Back-End Loads":

Also known as deferred sales charges (DSCs). A back-end load mutual fund sales charge is applied only when you redeem the fund. The percent charged is on a sliding scale that reduces by a prescribed amount each year over a specified time frame. For example, the payment may be 5% if you redeem after one year, and reduced down to zero % if you redeem after seven years. While these back-end mutual funds have the advantage of having all your money go to work for you, watch out for those funds that impose a distribution fee, or charge a higher management fee for back-end load mutual funds.

How Do Mutual Funds Work: "No-Load Mutual Funds":

The Hoss buys only no-load mutual funds. The no sales charges on purchases or upon redemption is just to big an advantage to pass up. However, before purchasing any mutual fund, The Hoss evaluates the mutual fund's performance, management expense ratio and any hidden fees associated with the fund. All of this information can be found in the Prospectus of the mutual fund you have selected.


Stay on track,
The Hoss

Next Hoss Cents Free Financial Money Magazine Post: Omaba and McCain Health Care Plans
Previous Post: American democratic Party Makes History

American Democratic Party Makes History

This week, Hoss's free financial money magazine has taken a back seat to the American Democratic National Convention.

The Hoss has been glued to CNN and yesterday's historic moment was one that moved The Hoss to tears. I knew the historical significance of what was about to happen when Hillary Clinton took the mike and motioned to cut the roll call vote short, saying "Let's declare together with one voice right here, right now, that Barack Obama is our candidate and he will be our president."


What I wasn't prepared for was the tears of joy flowing down the cheeks of many of the participants, who were obviously aware of the historical significance of what had just happened. Arguably one of the most momentous occurrences in American history. An African American leading a major party's ticket. Only 45 years ago Martin Luther King Jr gave his "I have a dream" speech. That dream, at least in part, has come to fruition.

In his acceptance speech Obama's Vice Presidential nominee Joe Biden, pointed out the economic success of the Bill Clinton presidential era and the economic failures of the Bush presidency and stressed that an Obama administration would reduce taxes for the working class, make health care accessible to all, and make education a priority.

All in all it has been a good week for the Democrats what with the great speeches from Michelle Obama, Joe Biden, Hillary and Bill Clinton, and the nomination of an African American for the President of the United States, Barack Obama. I feel privileged to have been able to watch this event and as a Canadian I congratulate the American Democratic Party and the American people. Maybe, just maybe, some day we will all be able to live in peace and harmony.

Stay on track,
The Hoss

Next Hoss Cents Free Financial Money Magazine Post: How Do Mutual Funds Work The Loads

Previous Post:Mutual Funds and Closed End Investment Funds

Mutual Funds: Advantages

From The Hoss's Mouth

Hoss Cents Free Financial Money Magazine explains the advantages of investing in mutual funds. Mutual funds are an excellent investment tool for both the novice and experienced investor. They are many benefits to mutual fund investing, which The Hoss has summarized below.

• Costs: Many mutual fund companies permit new investors to buy units (shares) with as little as a $500 initial investment. Subsequent regular unit purchases can be set up for as little as $50 a month. Whether you invest $100 or $100,000, all investors in the fund receive the same benefits of the fund.

• Diversification: You have probably heard the cliché "never put your eggs in one basket". Mutual funds, because of the vastness of their pool, provide a format in which the investor has a share in a variety of investments, bonds and securities. You can invest in any number of funds such as equity funds, income funds, specialty funds, mortgage funds, index funds, to name a few. Now that's diversification.

• Professional Money Management: Most people are not trained in the world of investing. When purchasing a mutual fund, you are in effect hiring the skill and expertise of a professional money manager. They do all the research and have the knowledge to make good investment choices on behalf of the fund. If they are not successful they will not be a fund manager for long.

• Efficiency: Mutual fund companies have large sums of money to invest and are able to negotiate commission rates.

• Liquidity: You can redeem you units or shares at any time at the net asset value per share (NAVS).

• Flexibility: Many mutual fund companies offer a multitude of fund types and allow the investor to switch between funds with little or no charge. This enables you to adjust the balance of your portfolio in accordance with the financial goals established by you and your financial adviser.

• Monitor Performance: You can monitor the performance of your mutual fund(s) by tracking their NAVS, which are reported daily in the financial press or on the Internet.

A word of caution: Due to the potential serious impact to your return on investment, The Hoss suggests that before you invest in any mutual fund, you familiarize yourself with all the costs associated with the fund(s) and the performance record of the fund manager.

Stay on track,
The Hoss

I have to mention three blogs I find to be very informative in no particular order of importance.

Very funny and informative The Red Stapler Chornicles.

For tips on how to make money on line check out the Money Blog

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