Jim Jorgensen's Weekly Stock Market Update
June 5, 2006

Read & Listen

Now you can also listen to Jim & Richard's radio show heard on local stations and cable systems on Sunday by downloading the program to your I Pod or other listening device on http://www.itsyourmoney.com/Podcast.mp3

On a high-speed internet connection, the download should take less than two minutes. The program file size averages 6MB. The radio program is also archived for the past four weeks on www.itsyourmoney.com.

Give a listen and let us know what you think, or any questions you would like us to answer on the air: iym@mchsi.com

Now it's called a Bounce Back!

Slower economic numbers and higher oil inventories gave investors a reason to buy stocks. But what caught the Street's attentions was the sluggish job report that raised concerns that the economy was cooling down fast. As a result, the big news was the early warning of the Fed meeting later this month. Then it may be able to pause in its nearly 2-year old credit-tightening campaign.

For the wild week of double-digit ups and downs, the Dow Industrials lost only 0.3%, the S&P 500 index rose 0.6% and the Nasdaq gained 0.4%. People are watching the action day to day. Year-to-date the Dow is up 5%. I believe the market will continue to rebound from the recent selloff and the Dow will finish the year over 12000.

Again, don't look at last week, if you are investing long-term for retirement is the only way to make your nest egg grow to support a reasonable life style in retirement. For example, in 1995 – about 10-years ago – the Dow Industrials were just over 3000. Today, over 11000 and pushing toward 12000. The magic number on Wall Street remains 11722 – the all time high set back on Jan 14, 2000.

Earning Interest

How crazy is this world of interest income? When Bank of America offers 3.7% on an Insured CD, [after taxes that is a net after income tax of about 2.5%. But you've read where the tobacco companies have promised to pay the states billions over the next several years, but the states want to spend the money now. So, for example, California is offering 5.25% municipal bonds free of state and federal income taxes, interest paid twice yearly. These are the CA Tobacco Securitization Agency Revenue Bonds. In a 30% tax bracket the net yield could be almost 7.5% tax equivalent return.

Hansen Natural

Following up last week's message on Hansen Natural – the soft drink manger. Just before the start of the year the stock was $80, March 1 $100, May 1 $140, it closed last month at $180. What's more, BusinessWeek [June 5] said Hansen Natural was #2 of the 100 hot growth companies. 52-week high-low was $146-$29. It has a return on capital of 31.9%. #10 was Blue Nile [NILE]; a Seattle based online diamond, the mega store of shine. Its 52 week high low $41 - $25. Return on capital 39.1%. And one of our long-time favorites Chico's FAS [CHS], a ladies ready to wear chain of stores that includes Black & White. Its 52 week high low $49 - $26 a share.

Heard in New York

The states lose a big one!

I've told you about Edward James $75 million payment to the SEC to end its investigation into its fund sales. The SEC said the firm failed to properly disclose sales arrangements it had with a handful of mutual funds in recent years. Several states, including California, went to court to obtain millions more from the broker. But James said this was a federal matter. Last week a California court ruled that the state's case conflicted with a federal law that gives U.S. regulators sole authority to set security-industry disclosure rules. The latest is the state of California will appeal the case.

Gambling anywhere?

Wall Street is rattled by the Nevada Gambling Commissions approval of mobile devices for gambling outside the actual casino. The may be, experts say, the first step toward the expansion of gambling on cell phones and over the internet. Companies with major investments in real estate and buildings, for example, could be a risk if you just need a cell phone to gamble.

Does your student have a school loan?

Until July 1 the current rate is 5.3% on student loans and Stafford loans. The rate is expected to shoot up to 7.14% on July 1. Grabbing the lower rate is for students who consolidate their variable-rate student loans into fixed-rates loans before the higher rates take effect. Only those who get consolidated applications in before June 30 can lock in the lower rate. For more see the financial aid office, call the Education Department Hotline 1-800-4-FED-AID or go to www.ed.gov.

Delta lets the PBGC take over its pilot's pension

In a new deal Delta got its pilot to agree to turn over its pension to the PBGC, in which pilots, who must retire at age 60, would get about one-third of the benefits promised under the original Delta pension plan. The new twist is that Delta promised to give the pilots union a $650 million note upon its exit from bankruptcy court to help compensate for lost pension benefits under the government guarantee program. Company pensions already turned over to the government agency include United and US Airways.

Save money on vacation

The past year's hurricanes have sharply cut bookings on cruise ships. Also, the industry's capacity is up 16% in the last three years, and cruise lines are slashing prices. The reason? Under normal times, 65% of a ship is sold months in advance, paying for the cost of the trip. The remaining 35% is pure profit. This is where the cruise lines can deal in the weeks and months before departure. Check out some bargains on www.cruiseonly.com and www.cruisecomplete.com.

More problems with rent-a-cars [Please note if you travel]

A friend rented a car on Priceline.com. It appeared to be a good price, but when he returned the car, he found he was three hours late. For example, if you rent the car at 11am one day you must return it before 11am when you turn in the car. Budget told him that they charge $8 an hour, but Priceline charges $17.95 an hour and it takes all the money.

Understand this: some rental car prices can be attractive because the rental company knows that people frequently forget the time they picked up the car. The three hours [a minute into the hour counts as one hour] cost $53.85. If you are not careful, it can make renting a car online very expensive.

Letters from readers and listeners

A listener who downloads the program to his I Pod in Seattle, WA asks:

"We just found out the owner of the company ran off with the last five years of worker contributions to the company retirement plan. What can I do?"

Not much. The PBGC typically only covers larger company pensions with over 100 to 150 employees who pay the annual insurance fee. No government agency protects 401(k) type defined contribution plans most private employers have. I would contact the Labor Department, who is investing hundreds of cases of missing funds where owners or trustees have skipped out with the money. Also, contact The Pension Rights Center, Washington, DC 202-296-3776. In the future, check and double-check your retirement plan statement each year – maybe every six months. If you leave your company make sure you rollover your retirement plan money into your IRA and keep it safe in your name.

"I understand the law has changed to protect my IRA funds from creditors. What is the latest deal?" Listener and reader in Denver, CO

In the past, under federal law, only tax-qualified retirement plans that were employer-sponsored were safe from bankruptcy or liens. States had different rules and in many states creditors and the IRS could grab IRA money. As a result, many people in business did not roll over their 401(k)s and pensions into IRAs.

But the U.S. Supreme Court ruled that federal protection extends to IRAs and other individually established plans. The fine print did say, however, that the protection would cap the IRA exemption at $1 million.

Listen to the radio show online

Now you or a friend can log onto www.financialsavvy.com and download the radio program to an I Pod, listen to the show on the computer, and view a recent copy of the newsletter. Check out our web site and let us know what you think! Remember, in the upper right hand corner is a link to BigCharts that gives you the history of any stock for 1, 3 and 5 years.

Weekly Stock Market Update Newsletter

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Richard Jorgensen’s Tech News from the Silicon Valley
June 5, 2006

Silicon Valley News Highlights

Free Gas?

Incentives are back in a different form. Some are offering cash back. But now the push has been discounted gas by GM, and extra feature sets by many others. In both cases you are actually paying in the price of the vehicle hat they are giving you back. You get leather seats but they knock it off the price, but the knockdown is not quite all the up charges they have for the more premium level. You do get a good portion back but you do pay more in the long run.

Does anybody really get the GM $1.99 a gallon gas promotion? You finance your car at 8% when you buy it, and the total includes the costs to cover the price difference to market gas. You are actually financing Chevy's gas costs – AND you pay the INTEREST! It just SEEMS to make a Hummer an attractive choice now! Just give me the couple of grand up front in cash and I will put to my own gas purchases!
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BTW – my favorite bargain is back – dealers in the west are advertising Dodge Minivans for $13.9k - that's a lot of family car for the money!

Twins in Reverse

The Chevy Aveo and the Suzuki Aerio is actually the same car. Usually the Chevy version is more expensive, with fewer features, and a shorter warranty. Presumably because more people trust or have heard of Chevy they would take a lesser deal for the name. Well times have changed. Suzuki (which GM has ownership) is now a real brand and the deals are in reverse this time! I recently saw the 4 door Suzuki for $9,999 and the 4 door Chevy for $7,999. ALWAYS research before you buy a car and do not automatically trust the salesman. In this case your cluelessness would cost you $2,000!!!!

YouTube is hot – this is a video-sharing site where everyone is posting movies, funny clips and such. If you want to se what the future of TV will look like – then visit www.youtube.com, or the video sections of Yahoo or Google.

Jim must be happy they repealed the telephone tax from the Spanish American war! While many say the refunds will be too small to worry about – I think most people will get back over $100 so this is worth watching out for the Government to refund you some money later this year.

ThrirftMaximizer

Holiday Specials!

One way to get a great deal is to jump-start the ads. Over the big Memorial Day holiday selling period I was looking for a notebook computer for a graduation present for my son. At 9pm I checked the BestBuy site – why 9pm PDT – because it's after midnight east coast. There it is – a $700 notebook for $399 with FREE shipping! Stores opened early for the people to wait in line for the few stocked at each store. Did I do that? No, I ordered online right then and saved the cold and fighting waiting in line – but you did not know that you could do this for most chains on their Sunday sales?

In General the ThriftMaximizer avoids slacker companies that do not put out or support their customers like the TM thinks they should. One is Citi-Bank. In my experience they have ridiculous agreements for using their cards and how they can market your name, they seem to have one of the highest rates of Spam and whishing emails – yet do little about it. And they tolerate the use of sucker scams where they send you what appears to be checks, but the fine print says you cash it you've signed up for their credit monitoring serve – which of course starts automatically sucking $9.95 of your money form your account each month. That's almost $120/year!