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Investment Commentary from BlackRock

"...At present, we believe that equity markets should continue to head unevenly higher over the next several months. Earnings expectations have been on an upward trend and the economic backdrop as a whole seems to be improving. Economic projections were weaker in the April to August period, stabilized in September and October and have since been moving higher. Our view is that global growth will continue to improve in 2011. There are a number of risks, including soverign debt issues, escalating inflation in China and the potential breakdown in global policy coordination, but our baseline scenario is for continued cyclical recovery. For stocks, this should present a supportive backdrop, and while we are likely to continue to see additional price pullbacks, we believe they should be viewed as part of a consolidation process in a market that is heading higher..."

Bob Doll is Chief Equity Strategist for Fundamental Equities at BlackRock, a premier provider of global investment management, risk management and advisory services.

Starbucks to Open China Coffee Farm

PUER, China—Starbucks Corp. signed a deal with the Chinese provincial government of Yunnan to set up its first-ever coffee-bean farm in the world to cater to a rapidly growing population of coffee drinkers in China amid a global battle for quality coffee beans.

In the southwest province steeped in thousands of years of tea production, the Seattle-based coffee chain is hiring and training local coffee growers. The hope is that Chinese-grown arabica beans, a bitter-earthy variety, will fill the cups of a culture that is acquiring a growing taste for coffee.

China's thirst for coffee is surging. Coffee sales climbed 9% last year to 4.6 billion yuan ($694 million), according to research company Euromonitor International. Starbucks currently operates 400 stores in mainland China and has plans to open a thousand more in the coming years.

China is poised to become Starbucks' second-largest market behind the U.S., overtaking Canada, Japan and the U.K.

Starbucks' 2010 revenue jumped to $10.7 billion, up 9.5% from 2009. International store sales increased 6%. The company, which has a nearly 70% market share in China, according to Euromonitor, declined to provide specific information on its growth in the country. Starbucks is in its second year of recovery after cutting $600 million from its operating costs. U.S. sales are picking up, but the company isn't opening new stores there. Starbucks is looking for new ways to grow.

http://online.wsj.com/article/SB10001424052748704462704575609733431622088.html

Seven smart money moves for the holidays

By Brett Arends, The Wall Street Journal — 11/21/10

This will be the fourth holiday season of the great slump, and for many it isn't getting any easier. Times are tough. So how can you stop the Grinch from stealing Christmas this year? Here are seven smart money tips to get the most bang for your (diminished) bucks this holiday season.

1. Set a gift budget.

And stick to it! Too many people blunder into Christmas backward, with an open budget and an open wallet.

"One of the worst mistakes is to make a list of everybody you want to buy presents for, and then to go down to the mall and start buying," says Jim Heitman, a financial planner in Alta Loma, Calif. "It's a disaster."

No wonder so many people spend a fortune during the holiday season -- and wake up in January with a horrendous credit-card bill.

You'll be better off if you work out in advance what you can afford, set a budget and work with that.

As for sticking to a budget -- everyone has preferences, and I have mine. I leave the plastic at home. Only take cash to the mall. If you can't spend the money, you won't. Simple. Willpower doesn't even come into it.

2. Negotiate a gift truce among adults.

"Lose the guilt on how much you might not spend this year," says Elaine Scoggins, a financial planner in Seattle. "It's a rough year for lots of people."

And she adds: "Think about how few of last year's holiday gifts are now really valued by you, your family or your friends. Can you even remember what you gave? What you received?"

If you can't negotiate a truce, dial down the number of presents. "Consider pulling names so you are only buying for one person instead of the whole family," says Lauren Lindsay, a planner in Covington, La.

3. Focus on experiences instead of "things."

Give cooking classes. A spa treatment. Tickets to a game.

Studies and common sense consistently show that these get a lot more bang for your buck than mere store-bought items. Why? Psychologists find that experiences tend to gather luster in our minds over time.

Meanwhile, stuff gathers dust in a hall closet.

Don't believe me? Go on eBay and see how much last year's "must have" gadget is now selling for. So "take the focus off buying so many gifts, and think of a new ritual for the holiday gatherings," says Donna Skeels Cygan, a planner in Albuquerque. "Maybe it could be spending the day baking cookies or old-fashioned cinnamon rolls, or having everyone write down a happy memory from the past year."

Ms. Scoggins recalls: "One of the best, most relaxing holidays my family ever had was when we all agreed to hold down the gift giving, get up early on Dec. 25 and drive to a nearby and inexpensive place to ski.

"We skied all day with our adult daughter and had a blast. If you get the choice, opt for time spent together building memories versus giving stuff that leaves you drained of your hard-earned cash."

4. Set up funds for the children (or grandchildren).

If you have young children or grandchildren, this is a great time to set up 529 tax-sheltered college savings plans for them.

That'll give discipline and focus to saving, and save on taxes. The money will also stay under your control.

Does this seem too serious for the holiday season? Remember that over the past 30 years, college costs have grown six times faster than middle-class incomes. A 529 plan will attract gifts from friends and relatives who may otherwise struggle with gift ideas for your kids.

Andrew Feldman, a financial planner in Chicago, tells parents: "When grandparents or friends and other relatives ask what to get Junior for the holidays, ask for a 529 contribution."

Meanwhile, if you have teenage children or grandchildren, Bonnie Hughes, a financial planner in Reston, Va., suggests you help them open their first Roth individual retirement account to help them start saving -- and promise to match some or all of the contributions they make in the next year.

5. Make your charitable giving more effective.

This is the time of year when people give the most to good causes. But do you do it most effectively?

Don't just be reactive. Hunt out and research organizations you want to support. Plan in advance. Solicit ideas from family and friends.

Mark Joseph, a financial planner in Reston, Va., says he encourages clients to "take a year from giving people stuff they don't really need and...give the gift of giving."

Make donations to charities of their choice. One way to do this, he says, is through a program like Fidelity Investments' Charitable Gift Fund's "Gift4Giving."

6. Give cashless gifts.

"My brother-in-law baked us cookies for a number of years," says Mr. Heitman. "He gave us all a basket of cookies each year, and we loved it. He had a small business, a start-up, and he didn't have a lot of money."

The cliches are right. It's the thought. Ms. Lindsay in Louisiana agrees. "Give of yourself," she says. "Baked goods, soups, flavored olive oil, knitted or sewn items, pesto...these are all lovely gifts to receive, and cost less to make than to buy."

She recalls "when my friends were having babies and I was still single, I would give them babysitting time as presents." Financial cost: Zero dollars. Value: Priceless.

7. Be a smart shopper.

It's too easy to lose your discipline during the holiday season.

Rick Kahler, a financial planner in Rapid City, S.D., says we are especially vulnerable to making money decisions blindly at this time of year. "We are surrounded by expectations and pressures about 'ideal' holiday celebrations, with the perfect gifts, the perfect decorations and the perfect foods."

He says it's particularly important to recognize the subconscious beliefs trying to push us around. After all, a dollar is a dollar at every time of the year.

So if you're traveling, book as early as possible and try to fly on Wednesdays, says Ms. Lindsay. It's cheaper than traveling on weekends.

Don't just splash out on items. Research prices online to make sure you're getting the best deal. And look for online deals and coupons.

And go to the store the day after Christmas to buy wrapping paper and cards 75% off...for next year.

Own a piece of the products you use

Do you or your family use:

Gillette shaving products?
Ivory soap?
Secret deodorant?
Crest toothpaste?
Scope mouthwash?
Iams pet food and supplies?
Pepto Bismol for those queasy stomachs?
Nyquil when you have a cold?
Charmin in the bathroom?
Bounty to wipe down the countertop and clean spills?
Duracell batteries for your digital devices?
Tide to wash your clothes?
Swiffer to dust and clean your home?

All of these products (plus dozens more) are all from Proctor & Gamble, the world's largest consumer products company.

Proctor & Gamble is one of the few premier dividend growth stocks. As a company, it is a leader in understanding consumer needs, innovative marketing and building brand loyalty. The company enjoys a tremendous benefit of scale, providing enhanced sales opportunities and cost savings compared to its smaller peers. The company’s broad product portfolio and sizable distribution network will continue to be a strengths, along with its balance sheet and free cash flow. And it pays a +3% dividend which is triple the current money market interest rate.

But did you know you can purchase Proctor and Gamble stock shares directly from the company?

For a minimum opening balance of $250, you can establish an investment account with Proctor & Gamble. No need for a brokerage account.

www.pg.com/investor

I have enrollment information for those interested.

Disclosure: I do not hold Proctor & Gamble.

Peak Oil

Charles Maxwell presented this at the Advisors Money Show...

http://www.weedenco.com/institutional_research/overview_biographies/#maxwell

In 1956, Dr. M. King Hubbard predicted that oil production in the lower 48 states would peak in the early 1970s. He based his predictions on geology and the fact that the circumstances that originally resulted in the creation of oil reserves in the Triassic and Jurassic periods have not occurred since then. There is no ongoing creation of oil reserves.

The cheapest oil is shallow but once that is tapped then drillers must go deeper to discover new oil fields. Going deeper whether on land or offshore then becomes increasingly complex and expensive.

Since the early 1970s oil production in the lower 48 states has decreased. The reserve base is slowly being liquidated without natural replenishment.

Globally, oil production is expected to decrease between 2015-2017.

• OPEC's peak oil is anticipated 2023-2025.
• Non OPEC countries peak oil is projected to 2010-2011.
• Saudi Arabia is expected to peak oil around 2030.

The maximum that can be harvested from oil sands production is 3.5 million barrels per day.

Exploitation of new oil fields is complicated by nationalism, political instability (Africa), rising costs, and political decisions (Gulf of Mexico deep-water drilling suspension). Alaska's Prudoe Bay can only produce 700,000 barrels/day, not nearly enough to offset the Gulf of Mexico moratorium.

Today 10 billions barrels are produced daily but 28 billions barrels are used daily.

Expect the price of oil to significantly increase to support new exploration and production. For an investor, this could bode well for major oil company earnings. Analysts predict the price of oil to increase to $120 barrel by 2015 and $300 barrel by 2020.

In addition to major oil companies, expect the oil service companies will achieve similar profits. Those are: Halliburton (HAL) and National Oilwell Varco (NOV). Expect growth in these industries for the next ten years.

Cyclical/Secular Outlook

This was presented at the Advisors Money Show by Ned Davis, President of Ned Davis Research...

http://www.ndr.com/invest/public/aboutus.jsp

Technical stock market indicators are all bullish. Presently, demand is above supply. This is being fueled by excess liquidity injected into the economy by the Federal Reserve. Some key points:

• There are $2.8 trillion still invested in money market accounts.
• Low consumer confidence is a contrarian indicator for positive stock market.
• The Price to Earnings ratio of the S&P 500 is "12" which is a bullish indicator.
• S&P 500 earnings have increased 20%.
• Emerging Markets have had a good rum but are still expected to outperform U.S. markets.
• Emerging markets have half the debts and half the deficits of the developed countries.
• U.S. growth forecasts suggest mild and sluggish growth.
• Expect a wobbly U.S. economy for the next 4-5 years.
• Emerging Markets still have enough horsepower to run for another 4-5 years.

Asset Allocation

This from a panel discussion at the Advisors Money Show with Morningstar's Director of Fund Analysis and three Mutual Fund managers...

The once simple "stocks and bonds ratio" allocation strategy has been replaced by:

• Growth
• Income
• Stability

This allows advisors and portfolio managers to maximize all opportunities rather than be constrained by limited investment options.

Today's Baby Boomers are looking for "yield." But in today's environment, yield is best obtained from quality and dividend paying stocks. To that end, these income-producing equities may be the "new" bonds. Investors are seeking a total return. Many investors are not concerned about where the money is invested but they are seeking a safe and consistent rate of return. They are seeking safety over performance and will accept lesser returns in exchange for stability and security.

• From an income perspective U.S. Treasuries do not make sense now.

To many investors, risk is associated with loss and uncertainty. But to others risk is associated with opportunities and profits.

• When looking at risk, it is important not to focus on "losing too much" but rather "not making enough". For example, you can pour your money into U.S. Treasures but the yields will not likely keep up with inflation and your investment will actually lose value.

Opportunities Overseas

This from an Advisors Money Show panel discussion which included Portfolio Managers from investment companies who specialize in overseas investments...

Russia. Expect 4-5% growth here, compared to 5-10% for Brazil, India, and China. India and China stocks presently are expensive and typically pay no dividends. Many consider Russia companies to be ultimately managed by the government but in reality there is less government interference in Russia than there is in Italy and France. Russia is the world's largest commodity producer. Expect Russia to outperform it's peers.

Africa. 40% of the world's commodities originate in Africa. As Africa develops so does the demand for infrastructure and consumer goods. But not all African states are created equal, some are "failed" states and others have significant government interference in corporate governance.

China. Chinese stocks are expensive now and government interference drags on corporate policy.

Closing observations:

• U.S. stocks are anticipated to grow 4-6%.
• Overseas markets are projected to climb 6-10% but with some volatility.
• Oil prices, currently in the low-mid $80s are expected to climb back to $100 barrel.

What is next for Fixed Income Investments?

This was an Advisors Money Show panel discussion which included Portfolio managers from PIMCO, Loomis Sayles, and Wells Fargo...

As a result of Qualitative Easing 2 (QE2), low interest rates have been extended for the foreseeable future. The goal of this Federal Reserve strategy is to move money from low paying "safe" assets like savings accounts and money markets back into circulation and investments.

• High Yield Bonds (non-investment grade) and Corporate Bonds are paying better than U.S. Treasury Bonds. The default rate on non-investment grade bonds is now less than 1%.

With so much money still sitting on the sidelines, stocks are cheap. And because corporations trimmed away fat during the recession, they are cash rich and the risk to investing in them reduced.

• Energy companies and oil service companies look especially attractive as those stock prices are undervalued and expected to resume significant positive growth once the global economy gets fully underway.

Presently the economy is on a sustainable 2-3% growth. Inflation is level at less than 2% but is expected to increased to 2-2 1/2% levels by 2012-2013.

If you can stand volatility, a 10-20% position in Emerging Markets could prove to be a very profitable investment.

2011 Investment Outlook

This presented at the Advisors Money Show by Sam Stovall, Chief Equity Strategist for Standard & Poors...

• During the April 2010 "correction" the stock market lost 16%.
• Since that low the market has climbed +10%.
• But historical patterns related to mid-term elections suggest that the market could jump 33%.
• Typically, the stock market has gained 17% in year 3 of a Presidential term.
• All of that suggests 2011 could be a good year for investments.

• Currently overall consumer spending is around 2.4%.
• But unemployment remains to hover around 9%.
• Real inflation is 1.7% and is expected to be around this level through 2013.
• Interest rates will remain very low.

• Expect slow but steady economic growth.
• Global growth is anticipation to be 3.3% while India/China growth is projected to run 8%.
• Today global earnings per stock share are averaging $83. By 2011 is it projected to be $94.
• Emerging markets still look to outpace U.S. growth.
• In the United States, the ripple effect from Europe's sovereign debt issues, housing and foreclosure problems, unemployment and undecided tax policy will be a drag on U.S. economic growth.

Over the past ten years, S&P 500 Dividend Aristocrats have delivered a total return of 113%.

• If you purchase quality stocks which offer +3% in dividends you will be able to beat inflation in the short term and accrue more money than if that money remained in bank or money market accounts.

5 retirement risks you'll face in 2011

By Joe Mont, THESTREET.COM - 9 November 2010

BOSTON (TheStreet) -- Along with the early arrival of "Black Friday" circulars, the winding down of 2010 means it is once again time to rethink and revise retirement planning for the year ahead.

There is, of course, no crystal ball to consult when predicting the year ahead, but there are notable risks to be aware of.

HARD-TO-PIN-DOWN RETURNS

Bulls and bears alike can ill-afford being too devoted to their particular outlook as calendars flip to 2011.

In recent years, one could traditionally assume an annualized rate of return of about 7% from the stock market. But, as the fine print says, past performance doesn't indicate future returns.

Some economists are predicting future stock returns could be as low as 4% in the coming months; others see a bounce-back that could exceed expectations.

An increased tax on dividends, if one were to gain traction given a Republican-controlled House of Representatives, could further rein in real returns. On the other hand, 2011 could be the year we finally shake off the Great Recession and its stultifying impact on volatile markets.

If the "experts" can't agree on what the future holds, what chance do you have for guesstimating your investments' potential? Unsavory as it may be, the best strategy may be to lowball your expectations. Base your assumptions on a lower-than-average return -- 4% to 5%, perhaps -- and adjust your portfolio accordingly. Don't give into the temptation to chase returns if doing so carries the risk or failure. If the worst-case scenario holds true, at least you will have no shock to the system. If returns see an uptick, the pleasant surprise will put you ahead of the game.

THE RETURN OF INFLATION

The hue and cry over potentially rising tax rates can mask an even bigger threat -- inflation. Even a minimal uptick in inflation can have a corrosive impact on your real rate of return and retirement savings. The average (until recently) annual increase of 3% could pluck thousands of dollars from your savings, and the compounded effect could require an eventual lifestyle downgrade once you retire.

Recent moves by the Federal Reserve all but assure a creeping increase that is unlikely to be undone by Washington's halfhearted efforts to trim the nation's debt and deficit. Jumping into tax-advantaged instruments such as municipal bonds may seem a smart way to avoid higher taxes, but there is the very real risk that the upside could be negated by higher inflation.

For those nearing, or in, retirement, the assumption has to be that investment returns are unlikely to fully offset any inflationary increase. Those lucky enough to still have a traditional pension plan may be dismayed to learn that many are not indexed to inflation. The only positive is that Social Security benefits will probably see their first COLA increase in two years.

As the new year approaches and inflation's return becomes likely, there are some investment alternatives that can help take the edge off -- although some have their own set of risks. Treasury inflation-protected securities and inflation-indexed annuities are worth exploring, as are the benefits that may come from commodity plays, so long as you remain diversified and don't go all-in with too heavy a play on gold or other currently booming investments.

LOW INTEREST RATES

Historically low interest rates have been taking a toll on many fixed-income investments. Though Fed policy may reverse this trend next year, anyone approaching retirement should carefully evaluate their exposure to these investments.

Though a move to long-term bonds may seem the way to go, be aware that the current state of the bond market may negate this traditional advantage. Going against the grain, numerous fund managers say they see greater value in putting their money to work in short-term or intermediate-term bonds.

As a counterstrike, dividend-paying stocks could likely make more sense to your bottom line. Popular and profitable companies paying a dividend include Wal-Mart, Bristol-Myers Squibb, McDonald's, Procter & Gamble, Coca-Cola, Johnson & Johnson, Verizon and AT&T.

A MOVING TARGET

The old rule of thumb was that investment risk should be dialed back the older you get. Young investors, with a longer time horizon before retirement, have been taught to jump wholeheartedly into the equity market to maximize their returns. Conversely, the closer you get to retirement, a retreat from the stock market to the relative safety of cash, bonds and other fixed-income plays is not only standard advice but the supposed model upon which Target Date Funds are based.

Unfortunately, this cookie-cutter advice, though once relevant, may not be in everyone's best interest. Diminished returns have created the need to replenish what was lost and pre- and postretirement expenses -- notably health care and long-term care -- are ballooning. Not including nursing home care (which can cost upward of $70,000 a year or more), various studies have pegged the out-of-pocket health care costs for retirees at about $250,000. The average rate of medical inflation during the past two decades has been nearly 6%, a number likely to increase for at least the next few years even with federal health care reforms.

As investors rebalance their portfolios entering 2011, increasing expenses, diminished returns and uncertainty about inflation will require that they either adjust their risk profile or downgrade retirement expectations to avoid outliving their assets.

A recent study by Aon Consulting, the global human capital consulting organization of Aon, detailed the percentage of one's final annual salary to keep the same standard of living after retirement.

It concluded that a worker earning $50,000 at retirement will need to replace 81% of that amount annually to continue the same standard of living. A worker earning $150,000 at retirement will need to replace 84% of that salary to continue the same preretirement standard of living. Social Security will provide only 23% ($34,500), while the employer retirement plan and/or worker's own savings must account for the remaining 61% ($91,500) each year.

Disclosure: I own Wal-Mart, Bristol-Myers Squibb, McDonald's, Coca-Cola, Johnson & Johnson, & Verizon

Dividend stocks get a new respect

By Jonathon Chung - Wall Street Journal

The spotlight is again on dividends after Intel raised its payout last week and the Federal Reserve said it might soon allow banks to increase their payments.

While U.S. investors have long been reluctant to embrace dividend stocks, there are some signs investors are paying some more attention.

Intel shares jumped 1.5% Friday after the company announced a 14% increase in its dividend. And bank stocks rose almost 6% in the two days after a report the Fed may loosen its rules to allow banks to increase their dividends.

In the first part of the rally from the March 2009 lows, stocks of non-dividend paying companies far outpaced stocks of those who do pay dividends. But as interest rates have reached new lows and the economy has remained sluggish, dividend paying companies have been catching up. The 372 dividend paying S&P stocks have a total return of 12.5% including dividends, since the end of June.

The reasons supporting investing in dividend paying stocks are many: Most importantly, the S&P 500 stock index is chock full of companies sporting yields higher than the 10 year Treasury note.

At least one class of dividend stocks is doing well: the S&P 500 Dividend Aristocrats index, the handful of S&P 500 companies that have increased their dividends for at least 25 consecutive years. These 46 stocks which include Exxon, McDonalds, Proctor & Gamble and Walmart have outperformed the S&P this year with total returns of 13.8%.

Sugar Daddies and Mommies Wanted!

In a national survey conducted by Prince & Associates of almost 1,000 unmarried people with incomes ranging from $30,000 to $60,000, the majority of those people recognized that money can ease a lot of concerns and "marrying up" makes perfect sense. Provided the circumstances are acceptable. About 2/3s of the survey respondents expressed a high degree of interest marrying someone for their money and the associated fiscal security. When asked about the amount of money it would take to seal the deal, every respondent gave a figure that exceeded $1 million.

"Very" or "Extremely" Willing to Marry for Money

Males 55.3%

Females 72.8%

Average 65.1%

Amount of Money required

Males $1.1 million

Females $3.8 million

Average $2.7 million

Source: The Family Office: Advising the Financial Elite (2010)

The 401(k) pays off for a lucky few

By Andrea Coombs, MarketWatch

SAN FRANCISCO (MarketWatch) — People who stuck with their 401(k) plan through thick and thin for the past 10 years more than doubled their account balances, according to the latest data from Fidelity Investments on the behavior of 11 million plan participants.

The average account balance for savers who are now 55 years old or older and have been participating in their plan continuously for 10 years was $211,300 at the end of the third quarter, up from $96,000 a decade ago, according to Fidelity.

Keep in mind: About two-thirds of the account-balance gain is due to savers’ own contributions, plus their employer match, and one-third of the gain is due to market returns, according to Fidelity.

Looking at the total population of Fidelity accounts, the average balance rose 9.4% to $67,600 in September, from $61,800 in June.

Workers pumped an average 8.2% of their earnings into their 401(k)s, a figure that hasn’t changed for almost two years. But a sign of optimism, perhaps: 4.2% of savers increased their contribution rate, a bigger portion than the 3.1% who decreased it.

5 solid stocks your kids will like

These child-friendly shares might look pricey, but they have a reputation for growth — and room for more.

Walt Disney. Mickey is a perennial kid-favorite. And this blue chip stock pays an annual dividend of 35 cents a share and is up 40% over the past five years. A history of conservative stock growth and the company’s acquisition of Marvel Entertainment last year may add to its bottom line.

Hasbro. Its live action films like "Transformers," and its games, like Battleship, will entice your kids. Investors are on board too: Hasbro’s stock is up 140% since 2005. Its quarterly dividend is 25 cents a share, up 25% from last year. Given its product innovation and management strength, Hasbro’s stock still has room for growth.

Apple. Even the least tech-savvy kid will get excited at the prospect of owning a piece of Apple. And despite its high price of $314 a share – up 410% over the past five years – analysts expect the stock to continue growing on the success of the iPad and iPhone.

Nike. Kids clamor for the the LeBron James shoe, and many of their favorite athletes are featured in Nike commercials. The company's quarterly dividend is 27 cent per share; Nike has proven to be a steady earner – the stock is up 88% since 2005. Nike weathered the downturn because of its name recognition and the popularity of its worldwide retail stores.

HJ Heinz. The ketchup company’s stock is up 58% from its 2009 low, largely a market downturn casualty. Long-term, the stock is likely to continue growing given its main product is a fixture on just about every child’s dinner plate (and at lunch and breakfast, in some cases). Currently trading at $49, the company pays a quarterly dividend of 45 cents per share for common stock.

Disclosure: I own Apple and Nike

Traditional IRA Deductibility Limits For 2010

For any tax year, your may contribute the lesser of the regular contribution limit or 100% of your taxable compensation (or earned income). If you reach age 50 by the end of a year, you may contribute an additional amount as a catch-up contribution. Here is a chart outlining contribution limits for some tax years:

You may contribute to a spousal IRA on behalf of your non-working spouse. The limits discussed above apply. Remember that if you also contribute to an IRA for yourself, both IRAs must be maintained as separate accounts, as IRAs cannot be held jointly. Of course, in order for you to make a spousal IRA contribution, you and your spouse must file a joint income tax return. Your combined contribution should not be more than the amount of taxable compensation you report on your tax return.

IRA participant contributions must be made by Apr 15. If Apr 15 falls on a weekend, the deadline is the next business day. Contributions postmarked on or before Apr 15 are considered to be made by the deadline.

"I Don't Have the Money..."

Many folks do not realize how little it takes to get a retirement investment plan going. They incorrectly assume it requires thousands of dollars to start.

Nothing could be further from the truth. In fact, investment companies have lowered the threshold specifically to attract those "starting-out" investors.

Did you know you may be able to establish a retirement investment account with as little as $50.

Yes, you read that right. Fifty dollars. All you need to do is agree to an Automatic Purchase Plan of $50 or more.

So for less than your monthly cell phone bill or less than dinner for two at Outback Steakhouse, you can start building retirement wealth.

Obviously everyone's situation is different and not all investment companies are suitable for every investor, but where there is a will there is a way.

Death Tax Not Just for the Wealthy

Unless there is Congressional action the Estate Tax which went away for 2010, will resume with a vengence in 2011.

Starting in 2011, any estate valued at over $1 million will be taxed at the 55% rate. Due in full no later than 9 months after death.

The good news is that, if you are married, your spouse does not incur any estate tax obligation.

But bad news is that if you are single or widowed, all of your assets are eligible for the estate tax.

Many folks think: "But I don't have a million bucks... so I'm okay."

The estate tax does not just look as money in the bank. It includes, real property, bank accounts, investments, corporate and individual retirement plans, and insurance. For example:

• You home is valued at a modest $250,000
• You own a life insurance policy on yourself for $500,000
• You have $100,000 in an investment account
• You have a company 401(k) valued at $200,000
• Other personal property and assets valued at $50,000

Things add up quickly...

Guess what? Your kids will have to pay the Death Tax on amounts over $1 million.

As always, consult with your legal and tax professional for the latest in this...

Compulsory cash

By Anne Tergesen, THE WALL STREET JOURNAL — 10/25/10

Congress, in an effort to give battered nest eggs time to recover, in late 2008 suspended the rule requiring older Americans to take withdrawals from tax-deferred retirement accounts such as traditional individual retirement accounts and 401(k)s.

The suspension—which was in place for 2009 only—is now over. Here are answers to some of the most commonly asked questions about required distributions in 2010:

I turned 70½ in 2009. When do I have to take my first required distribution?

• Normally, account holders must begin withdrawing money by April 1 of the year after they turn 70½. So, under normal circumstances, people who turned 70½ in 2009 would have had until April 1 of this year to take their first required distribution.

• But as part of the 2009 suspension, people who turned 70½ in 2009 were allowed to skip their first mandatory withdrawal—the one that had to be taken by April 1. That means these individuals have to take only one distribution this year, and the deadline for that is Dec. 31.

• For people who turn 70½ this year, however, the normal rules will apply—they will have until April 1, 2011, to take their first distribution, and until Dec. 31, 2011, to take their second distribution.

Has the formula for calculating withdrawals changed?

• No. To calculate the minimum amount the Internal Revenue Service requires you to withdraw annually, look at your account balance as of the previous Dec. 31 and divide that figure by your remaining life expectancy. You can always withdraw more. But if you take out less, you will be subject to a 50% excise tax on the amount you should have taken.

• Should I use my account's balance as of Dec. 31, 2009—or Dec. 31, 2008?

• For both account owners and beneficiaries who inherit IRAs, the answer is the same: Use your account's value as of Dec. 31, 2009.

Which life-expectancy figure should I use—my actual life expectancy or the number I would have used in 2009?

• Investors should use the life expectancy that corresponds to their current age. This data can be found in actuarial tables in IRS Publication 590.

Please consult with your tax professional to ensure compliance with these IRS rules.

Blue-chip specials from the Buffett menu

By Andrew Bary, BARRON'S — 10/23/10

Some recent investments by the legendary Warren Buffett have been slow to pay off. But these solid, well-run companies may still be a good—and inexpensive—bet.

There's no quibbling with Warren Buffett's extraordinary overall investment record, which has resulted in a $205 billion stock-market value for Berkshire Hathaway. But, in the past few years, Buffett has invested in some companies whose shares have been disappointing. Among them: ConocoPhillips, U.S. Bancorp, Kraft Foods, Sanofi-Aventis, Johnson & Johnson and even Wells Fargo.

All of these are strong, well-managed companies. Assuming Buffett hasn't erred, investors have the opportunity now to buy some of them for less than what Berkshire paid.

U.S. Bancorp, for instance, trades near 23, appreciably below Berkshire's average cost of $31. ConocoPhillips is at 61; Berkshire paid 73. French drug maker Sanofi's shares, at 34, are below Berkshire's cost of $40. Kraft is at 32; Buffett paid 33. We based the cost figures on data in Buffett's annual shareholder letter.

Buffett wouldn't discuss his equity investments. But in a CNBC interview in March 2009, he said: "I make plenty of mistakes…That's part of the game. You just got to make sure that the right things overcome the wrong ones." That's certainly true for Berkshire, whose Coca-Cola and Procter & Gamble holdings, which date back to the 1980s, are about 10 times above the company's cost.

Based on what Buffett has done in the market, he's gotten more bullish on Johnson & Johnson, and less excited about Conoco, Kraft and P&G this year; he has bought more J&J and pared his holdings of the others.

Many pros believe that, after a disappointing decade, blue-chip stocks will be one of the best investments over the next 10 years. Investing in those with the Buffett imprimatur could be a great way to share in that wealth.

Disclosure: I own Conoco, Johnson & Johnson, and Coca Cola

U.S. And Overseas Funds Rose in October

Foreign and domestic stock funds earned moderate returns in October, helping to remove some of the stigma of the disaster month. While tempered by the uncertainty of the midterm elections, the market cheered strong corporate-earnings results and the likelihood that the Federal Reserve will flush more cash into the financial system and keep long-term interest rates low. World equity funds rose 3.8% and 9.35% over those periods. Bond funds were mixed, with long-term Treasury funds down, high yield corporates up 2.5% and A-rated corporates bonds up 0.05%.

The Dow Jones U.S. Total Stock Market Index gained 3.8% in October, rising three of the past four months. It's up 7.2% year to date. Meanwhile, yields on 10-year Treasuries dipped below 2.5% in October, making dividend yields on stocks look more appealing.

With nearly seven in 10 S&P 500 companies having reported third-quarter results, earnings grew 30% year over year.

High unemployment is bad for stocks?

While losing one’s job is traumatic, a high level of unemployment doesn’t necessarily mean the stock market will suffer. In 2009, for instance, US unemployment climbed above 10 percent, but the S&P 500 leaped 26.5 percent.

This wasn’t an aberration. Typically, the stock market bottoms before the recession ends, but unemployment keeps rising even after the recovery has started. That’s because employers don’t start hiring again until they see clear signs that the economy is back in growth mode.

Because the stock market is often a leading indicator, if you wait for confirmation from falling unemployment to buy stocks, you can really miss out.

Stocks: Are small investors too late to the party?

By Brett Arends, The Wall Street Journal — 10/29/10

Private investors are getting back into the stock market—two months into the rally.

The latest numbers show investors put $759 million into U.S. equity funds in the week ended Oct. 26. Admittedly, that number is modest. But this the first time Main Street Americans been net buyers of U.S. equity funds in six months. They were cashing out all through the summer downturn.

Portfolio managers tell a similar story. The phones have started ringing in the past 10 days. Now that the Dow Jones Industrial Average has jumped 13%. Gold has risen 7%. Silver has risen a stellar 23%. Some other commodities have also boomed. And the dollar has fallen more than 5%.

Does this make it dangerous for investors coming late to the party? Ned Davis at Ned Davis Research thinks it might be. "There has been a lot of chatter and 'hopes' related to the November 2nd midterm elections..." he wrote to clients. "When one adds in all the 'better-than-expected earnings news,' one can make the case that a lot of good news is probably already baked into stock prices. Therefore, I would be wary about buying at these levels."

Mr. Davis adds that investors have now turned ominously optimistic. That is usually a bad sign.

John Hussman of the Hussman Funds—admittedly a very cautious investor—calls the current market "overvalued, overbought [and] overbullish."

When it comes to anticipating good news, Wall Street has an old saying: Buy on the rumor, sell on the news. In other words, by the time the happy event finally occurs, the market has often overanticipated the benefits.

Momentum may yet carry the stock market higher next week and even further. Short-term movements are notoriously difficult to predict. The most recent indicator is still bullish. Perhaps there are more good times ahead. But investors should make sure they're not just getting stampeded by the crowd.

The dominant ecosystem in technology

Analysis from Fidelity Investments Market Analysis, Research & Education group:

Roughly once every decade, there is a dominant ecosystem that emerges in technology.

Fidelity's technology, media and telecom equity sector research teams are bullish on mobile Internet due to its potential to emerge as the next ecosystem, which has significant investment implications across multiple industries.

The research team looked at individual product cycles and penetration rates across multiple geographies, to analyze historical patterns of adoption across a variety of consumer technology products over several decades (examples: VCR to DVD players, and CDs to iPods).

This analysis led to the conclusion that adoption rates for second-generation consumer technology products typically ramp faster than the initial device that defined the market, leading to conviction in accelerating smartphone adoption at a rate faster than took place for cell phones (and more generally, that mobile Internet penetration is occurring faster than desktop Internet).

Shoppers Hot for Smartphones

By Scott Moritz

Thrifty shoppers? Not necessarily in the smartphone market.

In a trend that seems to run counter to high unemployment rates and rising gas prices, people bought more $200 phones than cheap or free phones in the third quarter, according to NPD Group. Only one of the top five fastest-selling phones in the U.S. was a "dumb" phone.

In the past, promotional prices as low as $0 on simple flip phones or messaging phones were usually the big drivers of sales, with cheap models outselling more expensive devices by a mile.

Not so this past quarter as more people jumped on the superphone trend.

Leading the way, of course was the iconic Apple iPhone, which was introduced in June and suffered little in the ensuing antenna-gate controversy. Apple sold 14.1 million phones in the most recent quarter.

But the big surprise was Research In Motion. BlackBerries were expected to be crushed by the rise of Apple's iPhone and a host of Google Android phones. But the BlackBerry Curve managed to grab the No. 2 spot for most popular phones.

Pictured above, the Curve was a big hit not just with the usual BlackBerry crowd, but also among so-called prepaid customers who didn't lock into contracts, instead preferring to pay on a month-by-month basis. Outfits like MetroPCS and Sprint's Boost Mobile were big sellers of the typist-friendly BlackBerry Curve.

Landing at No. 3 was LG's Cosmos phone. This is the only messaging phone (read: non-smartphone) on the list and a big seller at Verizon and Sprint's Virgin Mobile.

Google Android phones round out the list with Motorola's Droid X at No. 4 and Verizon and Sprint's HTC EVO at fifth.

http://www.thestreet.com/print/story/10906898.html