Has the Economic Recovery Started?

From the Hoss's Mouth

Just like you, Hoss Cents Free Financial Money Magazine watched with great interest this week as stock markets around the world soared as Treasury Secretary Timothy Geithner released details of the administration's plan for financial recovery. Does this mean the economic recovery has started?




The Hoss does not have a crystal ball and cannot answer that question, but it certainly is a positive sign of a possible start to economic recovery. However, stock market performance is only one indicator among many that we must consider when looking at the overall economic stability.

Other factors that must be taken into consideration are consumer spending, housing sales and the unemployment rate.

Feb. 2009 housing sales in the United States increased from Jan 2009 but are still down year to year (Feb. 2009 over Feb. 2008). California was the exception, which showed a year to year increase primarily because of low record interest rates and the fact that the market was previously greatly overpriced. But it does appear that at least the bleeding has stopped, and once that happens, can full recovery be far behind?

With regards to consumer spending, Wal-Mart had a good year, while high-end retailers did not. When we see an increase in sales at these high-end retailers it is a positive sign for the economy.

Other positive consumer signs are an increase in car sales and increased movie attendance. Both of these indicate the consumer has some disposable money. To date, both car sales and movie attendance is down.

Now we come to the most important factor concerning economic recovery: jobs. In a consumer driven economy, if the people do not have jobs they will not have money to spend. So far, the jobless numbers continue to increase, which of course could be interpreted as a negative sign. But one must remember that businesses let employees go as a last resort in an economic downturn. However, when it comes to an economic upturn, employers are reluctant to reinstate those who were laid off until there is clear evidence of an economic recovery. So even though the jobless numbers are increasing, that does not mean the economy has not turned around.

Since Oct. 2008, the Federal Government has introduced several initiatives designed at stimulating the economy, creating jobs and thereby increasing consumer confidence. (TARP [Troubled Asset Relief Plan] $700 billion; Stimulus Package $787 billion; Housing Plan $75 billion; Federal Mortgage|Bond|Debt buy up and the Toxic Asset Relief Plan). Historically, initiatives such as these take six months to work their way through the system. This may also explain why we have, as yet, to see a decrease in the jobless rate.

So, even thought the Dow Jones Industrial Average has climbed 20% since its March 9th lows, we cannot assume this is the start of a full economic recovery, but we may have reached a bottom.

Sure there may be more ups and downs, but initial indications are the people have confidence in President Obama's administration and the plan they have put forth. Let's hope so, because without consumer confidence we will not see an economic recovery.


Next Hoss Cents Free Financial Money Magazine Post: April 05, 2009
Previous Post: AIG Too Big To Fail

AIG Retention Bonus Scandal

From the Hoss's Mouth

Today, Hoss Cents Free Financial Money Magazine discusses the AIG retention bonus scandal. Unless you have been totally deprived of news reports, by now you know that top executives of AIG Financial Products Division are eligible for $165 million in so-called retention bonuses.

The Financial Products Division is the arm of AIG that caused this successful insurance company to fail. As a result of their incompetence, 73 top executives became instant millionaires. One received a bonus of $6.4 million, seven received bonuses of $4 million, numerous others received more than $2 million, and still others received $1 million.




Apparently in 2008, based on a successful year in 2007, the board of directors of AIG decided to write bonuses of $450 million in employee contracts for 2009. No regard was given to whether or not 2008 would be a successful year.

AIG then experienced severe financial difficulty, resulting in near collapse of the company and a bailout from the US Government totaling close to $200 billion to date with possibly more to come.

The US Congress Bill approving the bailout contained a clause that permitted these bonuses to be paid.

Senator Chris Dodd, after initial denials, admitted his staff was responsible for inserting the clause that permitted AIG executives to retain their bonuses. He did so at the request of the Treasury Department. In fact, in an interview, Treasury Secretary Tim Geithner said that his department asked Senator Dodd to include an executive pay provision in the stimulus bill. This loophole allowed AIG to pay out the controversial bonuses.

As outrageous as these bonuses are, you may be surprised to learn that The Hoss agrees with this decision. Why? Because, as in Mr. Geithner's own words, it was aimed at making sure that the bill was "strong enough to survive legal challenge." Many of these executives may have sued the government over deletion of their bonuses and the resulting litigation would have probably cost more than the bonuses. We may never know for sure what the true cost of litigation would have been, but we do know the true cost of these bonuses. In fact, eleven have already returned some or all of their bonuses.

Now, The Hoss is fully aware that before the auto makers received their bailouts, they were forced to renegotiate union contracts, and that the unions cooperated. Where is the fairness or equal treatment with regard to AIG? What's the justification?

The simple fact is that AIG is just too big to fail. The result would be devastating to the economy. And not just the American economy, but worldwide.

More on this aspect of the AIG retention bonus scandal in the next edition of Hoss Cents Free Financial Money Magazine.

Stay on track,

The Hoss

Next Hoss Cents Free Financial Money Magazine Post: AIG Too Big To Fail
Previous Post:Madoff Pleads Guilty, Jailed

Madoff Pleads Guilty, Jailed

From the Hoss's Mouth

Hoss Cents Free Financial Money Magazine is ecstatic that U.S. District Court Judge Denny Chin revoked Bernard Madoff's bail (for details see Madoff remains free on bail). Madoff, who engineered the largest Ponzi Scheme in history, pleaded guilty to all eleven charges against him:

• Securities fraud
• Mail fraud
• Wire fraud
• Investment adviser fraud
• Three counts of money laundering
• False statements
• Perjury
• False filing with the Security Exchange Commission
• Theft from an employee benefit plan





Judge Chin ruled that Madoff not only had the means to flee, but also an incentive to do so. Madoff's lawyers indicated they will appeal this decision, but The Hoss believes Judge Chin is correct to jail Madoff.

Madoff admitted he never invested the funds in securities as he had promised and told investors. He also admitted to lying to the Security Exchange Commission when they questioned him.

Reports indicate that to date the firm's bankruptcy trustee has located about $1 billion in cash and securities. This is nowhere near the estimated $65 billion owed investors.

"I am actually grateful for this opportunity to publicly comment about my crimes, for which I am deeply sorry and ashamed," Madoff said in a public statement.

Three investors spoke at his hearing, and not once did Madoff look them in the eye. In fact he did not look at them at all.

The Hoss wonders if anybody out there believes Madoff could have pulled off such a huge scam without the help of others. Of course not, yet Madoff refuses to co-operate with investigators. He will not implicate his subordinates or relatives, one who worked with the Securities Exchange Commission at the time of his questioning.

Hoss Cents Free Financial Money Magazine sincerely hopes that this fraud, and others now being discovered, will encourage the authorities to improve and enforce stricter regulations.

Stay on track,

The Hoss


Next Hoss Cents Free Financial Money Magazine Post: AIG Retention Bonus Scandal
Previous Post: Collision Deductible

Madoff Remains Free on Bail

From the Hoss's Mouth

Hoss Cents Free Financial Money Magazine is appalled by the decision of Federal Court Judge Lawrence M McKenna to uphold the ruling of lower court Judge Ronald L Ellis that prosecutors have not shown Bernard L Madoff is a flight risk or could obstruct justice or is danger to the community. He therefore remains free on $10 million bail.

Madoff (pronounced Made off--how appropriate is that?) is alleged to have swindled investors of $50 billion. Yet he remains under house arrest in his $7 million penthouse apartment. Some of his investors stand to lose everything or a good portion of their life savings because they invested with Madoff not knowing he was operating what could be the largest Ponzi Scheme (older investors are paid from money deposited by new investors) in history.

Madoff's bail was not revoked, even though he allegedly mailed to friends and relatives, approximately $1 million in assets previously frozen by the courts. His lawyer claimed the mailing of these assets was an innocent mistake. Yea, right. The Hoss is of the opinion this was an obvious attempt to, either hide assets to avoid restitution, or move assets around so he could live off them later. This should have alerted the Judge to Madoff's willingness to disobey court orders and possibly flee. His bail should be revoked.




In today's tough economic times, when consumers are not spending, when mortgages are unavailable, when financial institutions are failing and the stock market is collapsing, the ruling of Judge McKenna does nothing to suggest to the average middle class person that their hard earn money is being protected. In fact, permitting a fraud artist to remain free on bail is akin to giving a Golden Hand Shake to mangers of failed companies while the stockholders lose their investment.

On Tuesday, a new President will be sworn in and his promise of "change we can believe in" gives The Hoss hope that even though things may get worse before they get better, they will get better.

Stay on track,

The Hoss

Next Hoss Cents Free Financial Money Magazine Post: Insurance, Insurance, Insurance
Previous Post: Record Job Losses

Financial Year in Review

From The Hoss's Mouth

Should auld acquaintance be forgot, and never brought to mind? Many investors and readers of Hoss Cents Free Financial Money Magazine would surely like to forget the financial devastation that took place in 2008. North American Stock Markets suffered one of their worst years ever.



Take a look a these numbers:

• Dow Jones down 33.8%

• S&P 500 down 38.5%

• NASDAQ down 40.5%

• TSX down 35%

These numbers combined with job losses, or threatened job losses, collapse of the housing industry, credit unavailability and unstable world economics has resulted in consumers loosing confidence in the financial system. As a result they have cut their spending significantly. Reports indicate the Christmas season, which normally provides retailers with 30 to 50 percent of their annual total sales, was not as lucrative as retailers are accustomed to and therefore some stores may be forced to close.

So what happens in 2009?

The financial crisis will not end unless or until people regain confidence in the financial system and learn to live within their means. Families will have to forgo unaffordable and unnecessary luxuries such as an extra car or two, big screen TV's, multiple cell phones, and dinning out just to name a few. In other words, people will have to learn to set financial goals and live by them. The Hoss has several previous posts which will help in this regard:

• Debt Control
• Good Debt Bad Debt
• Financial Priorities
• Creating a Budget
• Money Saving Tips

The Hoss and Mrs. Hoss hope you have a happy healthy and prosperous New Year.

Stay on track,
The Hoss

Next Hoss Cents Free Financial Money Magazine Post: Financial Crisis Deepens, Obama
Previous Post: North American Auto Industry Christmas Package

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

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

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

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

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

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

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

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

Next Hoss Cents Free Financial Money Magazine Post: How do Mutual Funds Work: The Loads
Previous Post: Definition of Mutual Funds

Definition of Mutual Funds

From The Hoss's Mouth

So just what is the definition of a mutual fund? Hoss Cents Free Financial Money Magazine explores the definition of one of the most popular investments tools available to today's investors: mutual funds .

Simply put, a mutual fund is a tool that permits a number of investors to form a pool of money to buy bonds, stocks or other types of securities according to a predetermined investment objective.

Mutual Funds are open-ended funds and can be bought and/or sold at any time by new and current investors of the fund in accordance with the NET ASSET VALUE per SHARE (NAVS). NAVS are calculated by subtracting the fund's liabilities from its assets and dividing by the total number of shares. This calculation is done each and every trading day.

In addition to providing the definition of mutual funds, The Hoss has compiled a list of positions you should be familiar with, as there are many people involved in the operation and organization of a mutual fund:

• Mutual Fund Manager: Markets and oversees the administration of a Mutual Fund(s)

• Portfolio Adviser: Directs the fund's investments. Often the Mutual Fund Manager and Portfolio Adviser is the same person.

• Principal Distributor: Responsible for the sale of the fund to investors.

• Custodian: The Mutual Fund Manager appoints a bank or trust company to hold all of the fund's securities.

• Transfer Agent And Registrar: Maintains the resister of the fund's unit holders.

• Auditor: Each year, performs an audit of the fund and compiles a report on the financial statements of the fund.

Now that you are familiar with the definition of mutual funds, The Hoss now will turn his attention to the question that all new mutual fund investors ask: How do I make money from a mutual fund?

You, the Mutual Fund Investor, profit when you receive distributions from interest, dividends or capital gains that the fund has earned. You also profit when the NAVS of your fund increase in value.

On the flip side, you could also experience a loss if your fund's NAVS decrease and the decrease exceed any interest, dividends or capital gains the fund earns.

The next several posts of Hoss Cents Free Financial Money Magazine will concentrate on mutual fund costs, the various types of mutual funds, the different investment strategies employed by each, and the advantages and disadvantages of investing in mutual funds.

The Hoss welcomes you to the world of mutual fund investing and hopes you benefit from this post on the definition of mutual funds.

Stay on track,

The Hoss

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

Previous Post:Mutual Funds and Closed-End Investment Funds

Mutual Funds and Closed-End Investment Funds

From The Hoss's Mouth

Mutual funds and closed-end investment funds are the topics of today's Hoss Cents Free Financial Money Magazine post. The Hoss will provide you with detailed information you should know about these fund types. With this knowledge, you will be in a good position to handicap the various funds available.

Mutual Funds: A fund that continually issues shares or units to investors. The risk factor of mutual funds range from low to very high, and depend on what type of mutual fund you invest in. Government bond funds for example are less risky than equity mutual funds. Your profits come from a trifecta made up from earned interest, dividends and/or capital gains. In addition, when you decide to sell some of or all of your units ,you could have an additional capital gain. Of course, if you sell for less than you're paid, you will have a losing ticket (capital loss).

Banks, fund companies and investment firms all sell mutual funds. When you purchase or sell units or shares of a mutual fund you receive the "net asset value" (NAV). In other words, you receive the current value of the fund.

Any fees and/or expenses the fund pays are deducted from the fund's assets. This could consist of management fees, incentive fees, trailing commissions, operating expenses and/or administration fees.

You may also have to pay sales charges, switch fees, redemption charges, short-term trading fees, registered plan fees, and minimum account fees. The Hoss says, before you purchase any mutual fund, make sure you are aware of all the charges you will be responsible for.

Closed-End Investment Fund: These funds differ from mutual funds in that they do not continually issue units or shares to investors and these funds may trade on a stock exchange. Consequently, it can be difficult to buy or sell closed-end funds, particularly if they are not listed on an exchange, or if they are listed, they have low volume trading.

Like mutual funds, the risk depends on what type of fund the investor purchases.

NOTE: You will be charged a commission when buying or selling closed-end funds on an exchange.

Time for The Hoss to do a workout, so until next time...

Stay on track,

The Hoss

Next Hoss Cents Free Financial Money Magazine Post: Definition of Mutual Funds

Previous Post:Labour-Sponsored Investment Funds And Commodity Pools

Labour-Sponsored Investment Funds and Commodity Pools

From The Hoss's Mouth

Today's Hoss Cents Free Financial Money Magazine post will highlight two unique investment fund types: Labour-Sponsored Investment Funds and Commodity Pool Funds. They are both considered high risk. So, The Hoss reminds you that if the risk tolerance assessment done by you and your financial adviser indicates you have a low risk tolerance, these funds are not for you.

Labour-Sponsored Investment Fund (LSIF): These funds help new and small businesses obtain venture capital and provides the investors with tax incentives. The costs associated with these Labour-sponsored investment funds are the same as mutual funds. However, the commission rates may vary from mutual fund commission rates and the manager may receive an incentive fee on top of the normal management fees.

The investors earn money from distributions of interest, dividends and/or capital gains. In addition, the investors may have a capital gain or loss when they sell their units or shares.

Financial institutions or labour organizations issue LSIFs.

The hold period on LSIFs can be as long as eight years, and even if you hold them long enough to qualify for tax credits, those tax credits may not be enough to offset any losses. SPECIAL NOTE: At the time of this post, LSIF tax credits in Ontario are scheduled to be eliminated at the end of the 2011 tax year.

Commodity pool: This fund invests in commodities or derivatives that are not permitted for investment by conventional mutual funds. The investor once again profits from capital gains, interest and/or by the dividends issued. The sale of the units or shares also result in a capital gain or loss.

The investor pays a commission upon the purchase or sale of units or shares. Management fees and operating costs are paid from the funds assets.

Due to the highly speculative nature of some commodity pools, you could lose some or all of your investment.

In horse race terms, neither of the above funds are for the chalk player .

Until next time.

Stay on track,

The Hoss

Next Hoss Cents Free Financial Money Magazine Post: Mutual Funds and Closed-End Investment Funds

Previous Post: Exchange traded funds and segregated

Exchange-Traded Funds and Segregated Funds

From The Hoss's Mouth

Exchange-traded funds and segregated funds are the topic of today's Hoss Cents Free Financial Money Magazine post. The first to enter the starting gate will be:

Exchange-Traded Fund (ETF): A fund that trades on a stock exchange and holds the same mix as a stock or bond market index. Some ETFs are actively managed more than others but they usually follow a stock market or bond market index. Just like a mutual fund, your profits are a trifecta made up from earned interest, dividends and/or capital gains. When you sell your units or shares, you will have a further capital gain or loss depending on the selling price as compared to your purchase price.

When you purchase or sell units or shares of an ETF you will pay a commission. Management fess and operating costs are the responsibility of the fund. As with other fund types, the risk is dependent on the type of fund you choose to invest in.

NOTE: When an ETF manager simply follows an index, less buying, selling, and research is required by him or her, therefore an ETFs fees and expenses are frequently lower than that of a regular mutual fund.

Segregated Fund: Investment funds combined with insurance coverage. It is an insurance product. Once again you hit the trifecta: earned interest, dividends and/or capital gains are your method of profit. Capital gains or losses also occur on the sale of your units or shares. These funds have the same cost as mutual funds and they have an annual insurance cost.

Insurance companies issue segregated funds and they hold these assets separate from other assets.

Segregated funds are bought and sold under an insurance contract. In most cases, if you hold the fund for ten years, all of your investment is protected against a market down turn. They typically come with a death benefit that guarantees a certain amount to your beneficiaries.

Risk, once again, is dependent on the fund type.

The Hoss and Mrs. Hoss have scheduled some personal time, so until next post time...

Stay on track,

The Hoss

Next Hoss Cents Free Financial Money Magazine Post: Labour-Sponsored Investment Funds and Commodity Pools

Previous Post:Investment Funds

Investment Funds

From The Hoss's Mouth

Hoss Cents Free Financial Money Magazine turns its attention to the world of investment funds. Investment funds are perfect for the maiden investor. You can invest in any number of investments for a relatively low purchase price, and because the funds are managed by a professional fund manager, s/he makes the investment decisions. Similar to a horse owner who hires a trainer to train and manage a horse's race schedule.

Basically, investment funds are a group of investments made up of one or several asset classes. Separate funds concentrate on specific investment types, such as: stocks, bonds, foreign country investments, and/or any combination thereof.

Return on your investment comes by way of distributions of capital gains, interest, dividends or any other income the fund may earn. In addition, if you sell your portion of the fund for more than you paid for it you will have a capital gain. However, if the fund depreciates in value and you sell, you will have a capital loss.

Investment funds are usually set up as a corporation, partnership or trust. Each individual investor is issued units in a trust or partnership, or shares if the fund is a corporation.

The Hoss has listed various investment fund types below:

Mutual Fund: units or shares are continually issued to investors

Closed-End Investment Fund: units or shares are limited and may be traded on the stock exchange

Exchange-Traded Fund: investments are proportional to a stock market or bond market index, and trade on a stock exchange

Segregated Fund: combines investment funds with insurance coverage

Labour-Sponsored Investment Fund (LSIF): tax incentives offered to investors and the fund gives venture capital to businesses

Commodity Pool: invests in derivatives or commodities unavailable to conventional mutual funds

The Hoss will give additional details on each of these fund types in the upcoming posts. In the meantime, hang onto the reins and enjoy the ride.

Stay on track,

The Hoss

Next Hoss Cents Free Financial Money Magazine Post: Exchange-Traded and Segregated Funds

Previous Post:Shares What Are They?

Shares, What are They?

From The Hoss's Mouth

Today Hoss Cents Free Financial Money Magazine will answer the question, Shares what are they?

Horses come in a variety of colors brown, black, chestnut and grey to name a few. Equities also come in various varieties. Common shares, Restricted voting share, Preferred share, Flow-through share and rights and warrants. Equities just like horses perform differently, some come with voting rights, some don't, some pay dividends, some don't, some allow share holders to elect directors, some don't. In all cases you usually have to pay a commission when you buy and/or sell shares. The only exception being rights and warrants not listed on a stock exchange for which there is no fee for their issue or exercise.

The Hoss has listed below various types of equities and a summary of each.

Common Share: Common shares come with the right to elect directors and in some cases vote on major corporate decisions. Depending on the companies performance and long term goals they may or may not pay a dividend. In the event of dissolution the common shareholders rank behind tax authorities, employees, creditors and preferred shareholders. You can make money in two ways; with the dividends you receive and if you sell the shares for more than what you paid for them(capital gain). You can also lose money by selling for less than you paid (capital loss). Risk is considered medium to high.

Restricted Voting Share: The same as a common shares except for voting rights.

Preferred Share: Check to see if still available. Preferred shares pay a fixed dividend. However, these fixed dividends may be reduced or suspended if the company falls on hard times or for some reason wants to preserve its capital. The price of a preferred share may decrease if other investment types become more profitable or if the company plans to reduce dividends. Preferred share prices usually do not fluctuate as much as common shares. Preferred shareholders may have the right to convert to common shares for a certain price or at certain times redeem their shares. Usually there is no voting rights. In the event of dissolution preferred shareholders rank behind tax authorities, employees and creditors but ahead of common shareholders. You profit through dividends and/or capital gains. Risk is considered medium to high.

Flow-through share: Oil and gas or mineral exploration firms issue these special types of common shares that allow certain tax deductions for qualifying exploration, development and property outflows to "flow through" to shareholders from the company. These are high risk and the tax legislation qualification requirements are very strict.

Rights and Warrants: You have the right to purchase additional securities from the company within a specific period of time for a specific price. Stock exchanges do list some rights but generally they are issued in proportion to the number of shares held by the shareholder. In some cases there may be restrictions on the exercising or resale of these rights. Warrants permit shareholders to acquire other securities of the company. The risk associated with Rights and Warrants ranges from very high to very low.

You or you and your advisor should do considerable research before purchasing any stock and even then there is no guarantee you will make money.

The Hoss can hear the dinner bell ringing so until next time,

Stay on track,

The Hoss

Previous Post: Equities

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