Posts Tagged ‘ Articles ’

Life Settlements – Ethical or Not?

A recent article in the Wall Street Journal talks about how a lawyer in Rhode Island is advertising and giving out $2000 in cash to policy holders who are terminally ill. In return, he is asking to be the beneficiary on their life insurance policies.

There have been many arguments for and against the investment. Some believe that it is a viable investment and is ethical while there are people who argue the believers. For those of you who would like to know what a life settlements investment is in a nutshell, please see my earlier post by clicking here. (Please note that I am in no way arguing for or against the investment; it is something I researched on as part of my internship at Quantum Financial Advisors in Washington, DC.)

Joseph A. Caramadre, the lawyer mentioned in the article, is known in the state of Rhode Island for his philanthropic endeavors. According to his lawyer and the article, Caramadre has given out $2000 anyway to people who have refused his offer of taking over their life insurance policies.

Relatives of the insured in question have looked down upon and filed lawsuits against life settlements investors. Insurance companies have filed lawsuits against the legality of these investments (please see the article in WSJ for more) making the rules surrounding these investments stricter. But, it really comes down to individual perception on the ethical aspect of these investments.

What are your thoughts?

Even after TARP, credit is hard to come by

TARP or the Troubled Asset Relief Program that the government put in place to buy out equity and assets from financial institutions to strengthen the financial sector does not seem to be motivating enough for banks to lend more to the consumers.

David Ellis in his article “Big Banks Still Not Lending” touches base on the lending market. He mentions how the lending has gone down 7% since March. Some of the market regulators believe the reason for the decline could be a lower demand by the industrial sector. This makes me believe that banks have more faith in the industrial sector than the consumer market even though it is the taxpayers’ funds that constitute the TARP.

Banks stress on the fact that they are lending more but the consumers believe that it is still very hard to get credit.

In a different article “Economy in ‘early stages of repair’, Colin Barr mentions that Tim Geithner thinks the economy has started to recover and there is a noted improvement in the stock market, but there still maybe tough times to face in the near future. Could this fear of facing tougher times in the near future be the reason why banks are not lending as much? Who knows? I just can’t wait till Wednesday to see what the new ‘regulatory reform plan’ put in place by the Obama administration would do to make the financial sector more stable.

Will come back with more on the Regulatory Reform Plan soon,until then please feel free to leave comments.

Unemployment Rate Going Up Could Be Another Sign of Recovery

Even though the number of jobs cut went down to its lowest in months, the unemployment rate has gone up. Chris Isidore in his article “Job Losses slow dramatically” written this morning talks about how economists believe that unemployment rate going up maybe a factor of an improved job market (potential). The reason economists think that it is a great sign of improvement is because they believe that people who weren’t looking for jobs before are now active searching for jobs. These people have been classified as “unemployed” instead of “not in the labor force”, a classification put in place by the Labor Department.

Although the number of jobs cut last month are only 345,000 instead of 520,000, it is still a very high number. But, something to keep in mind is that some improvement is better than no improvement. It doesn’t seem like there will be drastic improvement in the job market for at least another year or until other factors in the economy take a positive turn such as the GDP, imports and exports, companies that are going through bankruptcy currently do a good job at restructuring or which i think might be a very significant factor – growth of small business because they account for almost 80% of new jobs in the United States.

The aforementioned article goes in detail about the numbers and figures related to the job market and how people have started working part-time just to have some cash flow or have had their hours cut. Some of these numbers are an all time high and the number for jobs being cut in the month of May – 345,000 is also the highest figure for number of jobs cut in one month in the last three recession.

Beginning of June maybe the beginning of a new start for the Economy’s Uprise

I was on cnnmoney.com pretty much all day and a min ago ( I started writing this post at 4:08pm) Ben Rooney posted a new article that gives us fresh insight into the economy. It looks like there is massive growth being recorded in the stock market. He reports an increase of 2.6%, 2.7% and 3% for Dow, S&P, and NASDAQ composite respectively. It was mainly industrial and technology stock that led to a growth in the stock market.

There was also an increase in the per gallon price of oil, but, at the same time the US dollar continued to weaken in comparison to other currencies.

Ben Rooney quoted Phil Orlando, chief equity market strategist at Federated Investors saying something on the lines of this being the highest point of the recession and that economy is on it’s way to recovery. I agree with him to a certain point. Yes, it is a great sign of recovery, but, what about the huge amounts of bad debt in the economy? Just a personal insight. In all, any signs of recovery, small or big, is one step toward an uprising economy.

I’d like to end this post by just saying this article is a must read and any comments are welcome.

Here is the link:

Stocks Start June With A Bang

How can Twitter add value to businesses?

Twitter, a blogging service is getting more widely recognized now than ever before. There has been a considerable increase int he number of users that Twitter has according to Douglas A. McIntyre at Time Magazine. Celebrities and companies have many followers on Twitter and McIntyre believes that the number of users will keep increasing tremendously and by the end of 2009 Twitter might actually hit the 50 million mark. This will help companies expand their online business, build a brand name and just maybe increase their customer base.

Douglas shares an interesting point of view in his article ” 10 Ways Twitter will change American Business” and I agree with him. In the age of technology why not take advantage of Web 2.0 to build a network and expand your business.

But, then McIntyre also mentions how Twitter users have to be careful of the fact that it’s the users who lay down the rules of conduct.

I believe that no matter what measure of promotion a company takes, it has to be cautious of certain conditions be it rules laid down by the users of a service or rules laid down by some authority. However, Twitter to me seems to be a great marketing tool, if it is used the right way.

So What is Facebook Really Worth?

What started as a dating website limited to students of Harvard is now a worldwide phenomenon. Yes, I am talking about Facebook. Facebook is one of the most frequently visited websites in the world. It is presently the best social networking tool. People of all age groups are on it be it students, teachers, parents or grandparents. The popularity of the website has led to the massive success of Mark Zuckerberg, the 25 year old founder, CEO and president of the company.

One of the “hot” topics of conversations these days is “What is Facebook worth?” So what really is the value of Facebook? There are many calculation and valuations been done but there is no definite answer as to what really is the actual value of the firm.

In his Deal Journal article “Is Facebook really worth $10 billion?“, Gregory Corcoran talks about how different deals and offers provided to facebook determine different values for the firm. Microsoft put down $240 million for a 1.6% stake which makes the company worth $15 billion. Other offers include $200 million dollars for a 2% stake in the firm by Digital Sky Technologies.

Without sufficient financial data valuing a company it is hard to value such a closely held company.

I think other factors such as valuing of comparable firms (likes of MySpace) will play an important role in valuing Facebook.

What do you think?

Two Years Since the First Sign of Financial Meltdown

It all started “when news broke that two Bear Stearns hedge funds speculating in mortgage-backed securities were melting down” says Allan Sloan, a senior editor at large at Fortune dot com. He mentions in the articles that the meltdown came into existence because of “subprime” mortgages. Subprime mortgages allowed anyone with a poor credit history to get a loan. I remember in my Advanced Financial Management class we were talking about how banks were giving loans to people who did not even have adequate evidence of even having a job!!! The irony is that these are self-inflicted wounds and some of the major banks responsible for subprime mortgages such as Wells Fargo and Citibank collected billions of dollars through the Troubled Asset Relief Program.

Sloan also mentions that there are other reasons too behind the financial meltdown such as credit cards, constructive loans and leveraged buyouts. It seems like even if the housing market improves, that might not just alone bring the economy back up.

Link to the article:

The Financial Meltdown’s Unhappy Anniversary