Duck! No I don't mean a quack, quack. I meant get down, look out for a huge blob of brown stuff is heading your way.
This one is so large it is going to make Enron and Worldcom look like Boy Scouts stealing cookies at a picnic. As a result of these latest revelations we are going to have to find someone new to blame. So far the blame has been on the World Trade Center tragedy and dishonest executives at a few large corporations. These are a pittance when you see what is coming.
Does your company have a defined benefit pension plan? Did you know that 234 companies listed in the S&P500 index do? Did you also know that they owe their retirement plans $78 billion (yes, that's a B)? Wait a minute. I thought they were supposed to put funds into it every year. They are, but they haven't. How come these companies are showing big profits and not meeting their obligation to their employees?
It's all legal and has the blessing of the SEC (Securities and Exchange Commission).
This is how they do it. The company says they are going to make 10% return on retirement plans, but in 2002 they lose 5%. The SEC says they are allowed to project that profit over the next 10 years. If the company has a $100 million pension fund they put in their financial statement that they made $10 million in 2002, 10%. What happens to the $5 million loss? They deduct the $5 mil from the bottom line of the financial statement that now includes the $10mil phony profit and keep the $5mil as if it was actually there which it isn't. In reality the company now owes the pension plan $15mil which the SEC says they can amortize over the next 10 years. Talk about smoke and mirrors!
General Motors owes about $15.5 billion to its pension plan that is an amount equal to one half of the value of the entire company. Technically the employees own half the company, but my guess they will not see much, if any, of it. Do you think GM has the ability to make its current pension contribution plus another $1.5bil every year for the next 10 years? Quack, quack, quack. Not a chance. If the talking heads know about this they aren't quacking.
Once this becomes known not just about GM, but also the other 233 companies (and maybe yours) the stock market will be taking another dump. P/E ratios are now about 30 for the S&P500. When money is taken from their bottom lines it will result in pushing those ratios much higher which will further weaken the market.
Here are 3 questions for the owner, Treasurer or Controller of your company: What is the company's projected rate of return? Will there be funds paid into the plan this year? Does the company owe any money to the plan?
Don't let him give you a quack, quack.
Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.
Copyright 2005
http://www.mutualfundmagic.com; 1-888-345-7870
Wood Dale Chicago prom limo .. Lockport Chicago limo O’HareYou have decided to buy some stock or mutual funds,... Read More
It looks like the market is ready to start up... Read More
Just about everything you have been told about Social Security... Read More
When you invest in the stock market for ever-increasing cash... Read More
The demand for world oil is increasing while world reserves... Read More
People are constantly asking me why is the stock market... Read More
Reduce your investing and stock market risks by:Setting your sights... Read More
Most stock market traders have a favorite technical indicator.The one... Read More
In today's volatile and confusing stock markets everyone is searching... Read More
Picture one of those clubs where only the real heavyweights... Read More
People are always asking me when should I sell my... Read More
Recently I was invited to appear on a live CNNfn... Read More
An investor can find and research the best stock on... Read More
Do you have a nest egg? You know, a place... Read More
It looks like we have now entered a new bull... Read More
I am hearing predictions by brokers, financial planners, talk show... Read More
Every day I hear from the "experts" on CNBC-TV and... Read More
Buy high and sell low -- It's not a typo.Millions... Read More
Every day I hear someone on CNBC proclaim that "this... Read More
The trash business in its efforts to cook their books... Read More
Disclaimer: Please note that I do not necessarily purchase, own,... Read More
The bulls and bears of the stock market are both... Read More
A few years back ? it seems like an eternity... Read More
In 1960 an engineer working for a watch company in... Read More
The spring-loaded rat catcher is the ultimate low-tech device invented... Read More
Antigo wedding limo ..The greatest stock market myth is the idea that investing... Read More
Forget making a profit; instead focus on the income provided... Read More
Since I can remember, and that's a long time ago,... Read More
Because there are so many stocks that are NOT paying... Read More
If you haven't heard of the technical indicator with the... Read More
Who are the successful investors?There are those who follow the... Read More
The debate rages all over Eastern and Central Europe, in... Read More
When is a dividend not a dividend?The latest thing "conservative"... Read More
Everybody is riding the Wall Street Roller coaster. Even if... Read More
The ABC's of Stock Trading SuccessStock trading success...why is it... Read More
A Guide to Using Stop Loss Orders Stop losses are... Read More
What a great statement!I just heard someone use it in... Read More
How often have you come across an advertisement or e-mail... Read More
According to Investopedia Inc. the penny stock market has seen... Read More
Hello Inflation, it has been awhile, I see you on... Read More
Have you seen all those big full page ads for... Read More
Well maybe that's overstating it a little, but it's certainly... Read More
That sounds like good advice doesn't it? Don't lose all... Read More
After some forty years of banking and investments, I retired... Read More
Every day I hear someone on CNBC proclaim that "this... Read More
Investors who exclusively use broadly diversified, no load mutual funds... Read More
What is leverage?Here is a definition of leverage from an... Read More
I have watched my cat play with a bag of... Read More
You remember the story about the frog that was put... Read More
If you're a normal human being, your need to feel... Read More
Stocks & Mutual Fund |