Will Your Asset Protection Strategy Survive The Final Judgment?
Did you know that… we live in a lawsuit-crazy society? I’ll bet you do know that. And I bet you also know that court judgments are getting more and more outrageous all the time. Unless you have some sort of asset protection strategy already set up, whatever assets you have built up can be wiped out from a lawsuit that does not go your way.
Asset protection is a means for protecting your valuables from future lawsuits and creditor collection attempts. While many people are looking for a solid way to do this, there are many ways where the asset protection options that they try are not going to work.
But, there are asset protection strategies that really do work. What you want to do is to search out the right ones and use them effectively. Asset protection, or more precisely having an asset protection strategy, is something that many more people should take advantage of. What I plan to do in this article is to help you not take the wrong path n your asset protection strategy.
The first thing to do is to have your asset protection strategy in place before you get involved in a lawsuit. I know, how do you know if and/or when you are going to be involved in a lawsuit? You don’t. But,you don’t want to wait until you are being sued.
If you are involved in a lawsuit and a judgment is placed against you, don’t try to “sell” everything to your spouse or cousin or business partner for something like $1. If you start to arrange your assets to avoid them being taken after the fact of a court judgment, then that is like “closing the barn door after the horses have escaped”. It is too late. That would be deemed illegal and is known as a “fraudulent transfer”.
The court will recognize the transfer for what it is, an asset protection trick to try to keep your assets out of the hands of your creditors. The “sale” would be reversed by the court and the assets would have to be given to the creditor anyway.
By the way, there are also other things to be wary of when involving a spouse, another family member or relative or even a business associate in an asset protection scheme.
If it is found that your scheme was in violation of the Fraudulent Transfer Act then you could not only lose the assets that you were trying to protect, but there is the additional money the you would lose in court costs, attorney fees and the costs involved in collecting the debt. Also, your “accomplice” could have a judgment entered against him or her.
Another thing to keep in mind is that if you involve another person in your asset protection strategy by “selling” them your assets for a few dollars, the assets would legally belong to the other person and they would be able to do what they want with those assets.
It has occurred only too often that the new recipient of the assets has turned around and handled the assets in a manner that benefits them, leaving the original owner with nothing. Even though you trust somebody today, you never know what will happen in the future. So, in this case we can say, “Let the seller beware!”
One more point about “getting rid” of your assets through sale to your spouse: In the United States, if you live in a “community property” state then everything that is owned by you during the time of the marriage is also owned by your spouse and vice-versa.
So, transferring ownership to a spouse in a “community property” state does not help your asset protection strategy and does not protect you from creditors. The current community property states are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.
One asset protection strategy that does work and has been known to work very well is offshore asset protection trust or APT.
Here the assets are protected from lawsuits because they are in oversea territories and therefore untouchable in most cases. Of course, it is important to take note of applicable fraudulent transfer rules as well. As in most asset protection strategies, timing is very important.
Another asset protection strategy that has been shown to be very successful is offshore incorporation and offshore bank accounts. There are many benefits for incorporating offshore. Legally limiting the amount of taxes you pay on your income, and protecting your business against lawsuits are just a few of the ways an offshore corporation or IBC can benefit your asset protection efforts.
Forming an offshore corporation need not be any more expensive or time consuming than forming a corporation within your own country. Be sure to use a legitimate and established firm when setting up your IBC. Make sure your asset protection needs are being handled in the way you want and that you get answers to all your questions.
Keeping with the asset protection theme of protecting your wealth from lawsuits, the offshore bank account will also help address this issue. Most companies that offer offshore incorporation will also help you set up an offshore bank account.
It would be a good idea to keep the account in non-US funds. The accounts are usually offered with an international debit card, so you can access your funds from an ATM wherever you have access to one.
In conclusion… Laws are different from country to country, and from state to state. You need to get professional advice from a competent financial advisor as the first move.
Do not wait until you are already in financial trouble because then it would be too late. If you transfer assets in order to put them out of reach of your creditors at that time, it may be seen as fraudulent and illegal. You need to have an asset protection strategy in place before you are sued, and before anyone tries to take your assets away.
It is never too early to get a plan in place. Just remember the old expression, “If you fail to plan, you plan to fail.” Do it NOW!
What type of Asset Labels, Asset Tags, Property Labels, Identification
What type of Asset Labels, Asset Tags, Property Labels, Identification Labels do I need to buy for my School, Office, Company, College or University?
This article is designed to help people choose the correct asset labels for application in your School, Office, Company, College or University.
Asset Label Types
We have split asset labels into different categories and will explain their strengths and suitability and their applications.
1) Permanent frangible vinyl asset labels
2) Silver Voiding asset labels
1) Permanent Frangible Vinyl Asset Label
This label is suitable for most applications. These labels are much higher quality asset labels than the paper version and are more common in the field. The label material will conform to the majority of surfaces and forms a high-strength bond. This material has excellent initial grab and quite often (after initial application) will provide a good adhesion to many surfaces (when clean). The maximum strength of this label is attained within a 4 hour + period where the glue on the label hardens and makes the label impossible to remove in one piece
This is good for marking workstations, casings, monitors and smaller items. The grain on the computer plastics can be tricky to adhere to with certain asset labels, but the vinyl labels are very effective for this application. The material is also suited to varnished and smooth surfaces. These labels can be personalized with Code 39 barcodes, serial numbers and often with the logo printed too. Some companies offer further protection with a hologram label included to prevent counterfeiting. The vinyl labels are usually supplied on reels and most companies offer a turnaround within 33 to 5 days however some companies offer 24hr / next day service.
These are great for Hospitals, Schools, IT Department & Offices as when the adhesive sets it becomes very strong prevents people or children removing the labels in one piece.
This vinyl asset label material is suitable in many different applications such as:-
PC & IT Equipment, Monitors and LCD displays, Laptop Computers, Keyboards, Mice, Mobile Equipment including PDA’s, Networking Equipment, Fileservers, Hard Drives, Printed Circuit Boards, Painted Metal Surfaces, Wood, Plastics, Glass, Metals, Paper Surfaces, etc.
2) Silver Voiding Asset Label
This substrate is used primarily in situations where tampering needs to be revealed. The construction of the material utilises a two stage adhesive. The label will grab very well and on any attempt of removal, will leave the words VOID on the label and on the material it is stuck to. Even if you try to replace the label by sticking it down in the same position it is still apparent that tampering has taken effect.
This material is used in many different applications such as:-
Covering Memory & Expansion covers on IT Equipment, Sealing Paper, Card & Plastic surfaces, Calibration Seals, Sealing Postage Bags, Medicine Boxes and Cartons, Electronic Enclosure Boxes, HiFi & Stereo Units, Computer Cases, Mobile Telephones, PDA’s, Sealing Doors, NHS & Medical Equipment, Oscilloscopes, etc.
Read more about Asset Labels here
Using Asset Protection
Asset protection is a means for protecting your valuables from future lawsuits and creditor collection attempts. While many people are looking for a solid way to do this, there are many ways in which they can stumble down this wrong mistakenly. For many, the options that are presented to them are not, by any means, going to work. But, there are asset protection opportunities out there that really do work. The goal is to search out the right ones and make proper use of them. Asset protection is something that many should take advantage of no matter what.
Asset protection can be done in different ways. One such way is through Family Limited Partnerships and Trusts. These are effective ways of protecting assets. But, the problem arises when many assets are taken out. Then you can be back to where you started with judgment creditors reaching them nonetheless. In other words, your assets are still exposed and can be, therefore, attacked by the lawyers against you.
One of the largest mistakes that people make when it comes to asset protection is believing that putting assets in their spouses name or the names of their children can help them to protect them more so. This, by all means, does not work. This type of asset protection is worthless as sweeps will happen and this information can be easily found.
One type of asset protection that does work and works well is offshore asset protection trust or APT. In this case, the assets are protected from lawsuits because they are in oversea territories and therefore untouchable in most cases. Of course, it is important to take note of applicable fraudulent transfer rules as well.
Asset protection is offered by many companies. If you are looking for an option that fits your needs the best, make sure that you take the time to sort out the way in which it works and finding the right location for your assets. Asset protection is a fundamentally important aspect that deserves careful protection.
The Flip-Flop Asset Allocation Method
Do you put all of your money into some safe CDs to earn interest, or buy a biotech index fund to grab the next big move in genomic cancer drugs; or something in between? The world of investment options and strategies grows every year, so Ill provide a simple tactic to boost your returns over the course of your investing career.
The flip-flop method refers to taking the income from an income-producing investment and flipping that profit into a speculative investment. Then, take the profit from that speculative investment and flop the profit back into another income-producing investment. By doing this back and forth you are capturing both ends of the investment spectrum to increase your portfolio in a quicker and safer manner than either one individually.
Always start with a relatively safe income investment first. This way, if your first speculative investment is a 100% loss, youll still have the income from your income-producing investment to recover and try again. And, youll hopefully have the added education that you will have learned from the speculative loss. (Starting with a solid income-generating base can also give you the confidence to reach for a more speculative trade.) Once you are able to complete a speculative profit, put the money into a brand-new income-producing investment. This way, each speculative gain will diversify your portfolio into a wider range of income-producing investments.
Once that you have created a stable base of investment income, you should start ratcheting up the interest rate that you are willing to accept for new income investments. For example, you may have started out with a 3-year bank certificate of deposit but now you need to get a higher yield, perhaps by buying an income-generating mutual fund. There are funds of preferred stocks, loan portfolios, and exchange-traded real estate investment trusts. Moving even higher in yield may require some online searching to find people trying to sell their second mortgages, annuities, pension payments, etc. There are websites where people list financial assets like these for sale. If you arent comfortable with your level of expertise for buying mortgages yet, you can start with only $100 with loan-broker websites such as prosper.com.
So youve got some income flowing and are itching to find a speculative deal to step up your investing level. Lets start as small as possible: How about buying things at garage sales and selling them for more money on ebay? I found an ad for several hundred dollars of new printer cartridges for sale in a local classified ad. They were worth much more by selling them on ebay, even after shipping costs. I recommend you focus on your greatest interest (music, motorcycles, watches, or whatever) and find a market where to buy at low prices. And then add some value (refinish, update, add a bonus), and find a market to sell to the most frenzied fans. Bigger chunks of money are made on more expensive items, but you carry more risk if you dont keep up to date with the market. Such as cars, boats, planes, homes, jewelry objects that have a consistent and measurable marketplace to buy and sell them. For speculation with financial instruments, you need to go to the futures market to get the largest moves, and the most leverage. To keep from losing your home at the first Locked-Limit move against your position, options must be a part of each of your trades: either buy options alone, hedge a futures contract with an option, or use an option spread. When youve accrued bigger dollars to play with, you can speculate with land, commercial buildings, and businesses.
In spite of the specific examples that I have provided, you need to find areas that interest you the most for investment vehicles for both income-producing investments and purely speculative deals. Remember to always start with an income-investment first, and then start flipping and flopping your profits between the income-investments and the speculative-investments. This type of asset allocation rebalancing will certainly add greater returns to your portfolio.
The Definition Of Asset Management
Many of you have probably heard the term “asset management” Before, but you may not have an idea of what it really is. Asset management is a broad term. It can be defined as a process that guides the gaining of assets, along with their use and disposal in order to make the most of the assets and their potential throughout the life of the assets. While doing this, it also manages and maintains any costs and risks associated with the assets. It is not something you can buy, but rather a discipline you must follow in order to maintain your assets.
Asset Management can be used for a variety of things. Most use asset management to keep track of their cash or “liquid assets.” Banking institutions are considered a form of asset management (savings accounts, CD’s, mutual funds, money market accounts, etc.) along with investments. Another example of assets: businesses often have a product to sell. These products are considered assets. The right asset management system can be utilized to make the product more readily available, easier to produce, cheaper to ship to customers, etc.
Asset Management Resource:
Tracking and insuring the product is also a way of asset managagemant. The product is an asset to the business and essential for its survival and for financial stability. So, maintaining and managing this product is of the up most importance.
There is another type of asset that many people do not think of when they think of the term “asset management.” This asset has to do with public and shared assets such as: the building and maintaining of streets, highways, water treatment facilities, sewage, electricity, natural gas, clean air, etc. All of these are assets that everyone on this earth needs. Usually, your city or local government uses asset management to maintain the cost of these assets.
They also use it to produce some of these assets more effectively and in a more cost efficient manner. Natural resources such as: water, electricity, and natural gas are managed so that they can be renewed constantly and thus available inexpensively.
Asset Management Resource:
There are many different means of asset management. It often depends on what type of asset is involved. There are companies and software products available to assist in asset management. Whatever method you choose, there are many similar things that your asset manager system should entail:
1. Optimize asset use and manage all maintenance efforts involved by
making assets as accurate, reliable, and efficient as possible.
2. Reducing the demand for new assets and thus save money by using demand management techniques and maintaining current assets.
3. Uses a form of asset tracking: knowing where the asset is at all times, how much the asset is worth, and how much the asset cost you to begin with. It should also incorporate this throughout the entire life of the asset.
4. Always tries to achieve greater value for money through evaluating the asset options: the cost of maintaining, producing, the use of it, etc.
5. Always provides a report on the value of the assets, along with any costs involved in maintaining the assets.
Hopefully you now have a better understanding of the many forms of asset management. There are so many different things that can be defined as assets, thus there are so many different means of asset management. Now that you understand it a bit, you can decide what your assets are and how you can maintain them better in order for them to be more advantageous for you!
The Bursting Asset Bubbles
The recent implosion of the global equity markets – from Hong Kong to New York – engendered yet another round of the semipternal debate: should central banks contemplate abrupt adjustments in the prices of assets – such as stocks or real estate – as they do changes in the consumer price indices? Are asset bubbles indeed inflationary and their bursting deflationary?
Central bankers counter that it is hard to tell a bubble until it bursts and that market intervention bring about that which it is intended to prevent. There is insufficient historical data, they reprimand errant scholars who insist otherwise. This is disingenuous. Ponzi and pyramid schemes have been a fixture of Western civilization at least since the middle Renaissance.
Assets tend to accumulate in “asset stocks”. Residences built in the 19th century still serve their purpose today. The quantity of new assets created at any given period is, inevitably, negligible compared to the stock of the same class of assets accumulated over decades and, sometimes, centuries. This is why the prices of assets are not anchored – they are only loosely connected to their production costs or even to their replacement value.
Asset bubbles are not the exclusive domain of stock exchanges and shares. “Real” assets include land and the property built on it, machinery, and other tangibles. “Financial” assets include anything that stores value and can serve as means of exchange – from cash to securities. Even tulip bulbs will do.
In 1634, in what later came o be known as “tulipmania”, tulip bulbs were traded in a special marketplace in Amsterdam, the scene of a rabid speculative frenzy. Some rare black tulip bulbs changed hands for the price of a big mansion house. For four feverish years it seemed like the craze would last forever. But the bubble burst in 1637. In a matter of a few days, the price of tulip bulbs was slashed by 96%!
Uniquely, tulipmania was not an organized scam with an identifiable group of movers and shakers, which controlled and directed it. Nor has anyone made explicit promises to investors regarding guaranteed future profits. The hysteria was evenly distributed and fed on itself. Subsequent investment fiddles were different, though.
Modern dodges entangle a large number of victims. Their size and all-pervasiveness sometimes threaten the national economy and the very fabric of society and incur grave political and social costs.
There are two types of bubbles.
Asset bubbles of the first type are run or fanned by financial intermediaries such as banks or brokerage houses. They consist of “pumping” the price of an asset or an asset class. The assets concerned can be shares, currencies, other securities and financial instruments – or even savings accounts. To promise unearthly yields on one’s savings is to artificially inflate the “price”, or the “value” of one’s savings account.
More than one fifth of the population of 1983 Israel were involved in a banking scandal of Albanian proportions. It was a classic pyramid scheme. All the banks, bar one, promised to gullible investors ever increasing returns on the banks’ own publicly-traded shares.
These explicit and incredible promises were included in prospectuses of the banks’ public offerings and won the implicit acquiescence and collaboration of successive Israeli governments. The banks used deposits, their capital, retained earnings and funds illegally borrowed through shady offshore subsidiaries to try to keep their impossible and unhealthy promises. Everyone knew what was going on and everyone was involved. It lasted 7 years. The prices of some shares increased by 1-2 percent daily.
On October 6, 1983, the entire banking sector of Israel crumbled. Faced with ominously mounting civil unrest, the government was forced to compensate shareholders. It offered them an elaborate share buyback plan over 9 years. The cost of this plan was pegged at $6 billion – almost 15 percent of Israel’s annual GDP. The indirect damage remains unknown.
Avaricious and susceptible investors are lured into investment swindles by the promise of impossibly high profits or interest payments. The organizers use the money entrusted to them by new investors to pay off the old ones and thus establish a credible reputation. Charles Ponzi perpetrated many such schemes in 1919-1925 in Boston and later the Florida real estate market in the USA. Hence a “Ponzi scheme”.
In Macedonia, a savings bank named TAT collapsed in 1997, erasing the economy of an entire major city, Bitola. After much wrangling and recriminations – many politicians seem to have benefited from the scam – the government, faced with elections in September, has recently decided, in defiance of IMF diktats, to offer meager compensation to the afflicted savers. TAT was only one of a few similar cases. Similar scandals took place in Russia and Bulgaria in the 1990’s.
One third of the impoverished population of Albania was cast into destitution by the collapse of a series of nation-wide leveraged investment plans in 1997. Inept political and financial crisis management led Albania to the verge of disintegration and a civil war. Rioters invaded police stations and army barracks and expropriated hundreds of thousands of weapons.
Islam forbids its adherents to charge interest on money lent – as does Judaism. To circumvent this onerous decree, entrepreneurs and religious figures in Egypt and in Pakistan established “Islamic banks”. These institutions pay no interest on deposits, nor do they demand interest from borrowers. Instead, depositors are made partners in the banks’ – largely fictitious – profits. Clients are charged for – no less fictitious – losses. A few Islamic banks were in the habit of offering vertiginously high “profits”. They went the way of other, less pious, pyramid schemes. They melted down and dragged economies and political establishments with them.
By definition, pyramid schemes are doomed to failure. The number of new “investors” – and the new money they make available to the pyramid’s organizers – is limited. When the funds run out and the old investors can no longer be paid, panic ensues. In a classic “run on the bank”, everyone attempts to draw his money simultaneously. Even healthy banks – a distant relative of pyramid schemes – cannot cope with such stampedes. Some of the money is invested long-term, or lent. Few financial institutions keep more than 10 percent of their deposits in liquid on-call reserves.
Studies repeatedly demonstrated that investors in pyramid schemes realize their dubious nature and stand forewarned by the collapse of other contemporaneous scams. But they are swayed by recurrent promises that they could draw their money at will (“liquidity”) and, in the meantime, receive alluring returns on it (“capital gains”, “interest payments”, “profits”).
People know that they are likelier to lose all or part of their money as time passes. But they convince themselves that they can outwit the organizers of the pyramid, that their withdrawals of profits or interest payments prior to the inevitable collapse will more than amply compensate them for the loss of their money. Many believe that they will succeed to accurately time the extraction of their original investment based on – mostly useless and superstitious – “warning signs”.
While the speculative rash lasts, a host of pundits, analysts, and scholars aim to justify it. The “new economy” is exempt from “old rules and archaic modes of thinking”. Productivity has surged and established a steeper, but sustainable, trend line. Information technology is as revolutionary as electricity. No, more than electricity. Stock valuations are reasonable. The Dow is on its way to 33,000. People want to believe these “objective, disinterested analyses” from “experts”.
Investments by households are only one of the engines of this first kind of asset bubbles. A lot of the money that pours into pyramid schemes and stock exchange booms is laundered, the fruits of illicit pursuits. The laundering of tax-evaded money or the proceeds of criminal activities, mainly drugs, is effected through regular banking channels. The money changes ownership a few times to obscure its trail and the identities of the true owners.
Many offshore banks manage shady investment ploys. They maintain two sets of books. The “public” or “cooked” set is made available to the authorities – the tax administration, bank supervision, deposit insurance, law enforcement agencies, and securities and exchange commission. The true record is kept in the second, inaccessible, set of files.
This second set of accounts reflects reality: who deposited how much, when and subject to which conditions – and who borrowed what, when and subject to what terms. These arrangements are so stealthy and convoluted that sometimes even the shareholders of the bank lose track of its activities and misapprehend its real situation. Unscrupulous management and staff sometimes take advantage of the situation. Embezzlement, abuse of authority, mysterious trades, misuse of funds are more widespread than acknowledged.
The thunderous disintegration of the Bank for Credit and Commerce International (BCCI) in London in 1991 revealed that, for the better part of a decade, the executives and employees of this penumbral institution were busy stealing and misappropriating $10 billion. The Bank of England’s supervision department failed to spot the rot on time. Depositors were – partially – compensated by the main shareholder of the bank, an Arab sheikh. The story repeated itself with Nick Leeson and his unauthorized disastrous trades which brought down the venerable and veteran Barings Bank in 1995.
The combination of black money, shoddy financial controls, shady bank accounts and shredded documents renders a true account of the cash flows and damages in such cases all but impossible. There is no telling what were the contributions of drug barons, American off-shore corporations, or European and Japanese tax-evaders – channeled precisely through such institutions – to the stratospheric rise in Wall-Street in the last few years.
But there is another – potentially the most pernicious – type of asset bubble. When financial institutions lend to the unworthy but the politically well-connected, to cronies, and family members of influential politicians – they often end up fostering a bubble. South Korean chaebols, Japanese keiretsu, as well as American conglomerates frequently used these cheap funds to prop up their stock or to invest in real estate, driving prices up in both markets artificially.
Moreover, despite decades of bitter experiences – from Mexico in 1982 to Asia in 1997 and Russia in 1998 – financial institutions still bow to fads and fashions. They act herd-like in conformity with “lending trends”. They shift assets to garner the highest yields in the shortest possible period of time. In this respect, they are not very different from investors in pyramid investment schemes.
Take the Guesswork Out of Asset Allocation
If the Enron and WorldCom scandals have taught investors anything, it is that betting your future solely on one company’s stock is a huge mistake.
In fact, talk to any financial adviser and the mantra these days is diversify, diversify, diversify. But to average investors, that’s not so simple. What exactly does that mean and how do they go about doing it?
Asset allocation means spreading out your money across different asset classes (such as stocks, bonds and cash) and within each asset class (not buying just one type of stock, bond or mutual fund). The idea is that when one asset class falls, another may rise, which cushions the portfolio.
“At minimum, a moderate investor would probably want to hold five asset classes: large-capitalization stocks, small-capitalization stocks, international stocks, bonds and cash,” said Roger Ibbotson, chairman and founder of the asset allocation firm Ibbotson Associates and finance professor at the Yale School of Management.
But diversification is not always easy or cheap. About 75 percent of mutual funds have minimum investment requirements of $1,000 or more, according to the Investment Company Institute. For a moderate investor, building a diversified portfolio can mean a large initial investment.
“A reasonable allocation might be 38 percent large-cap, 7 percent small-cap, 15 percent international, 30 percent bonds and 10 percent cash,” Ibbotson said. “But if the minimum investment is $1,000 per mutual fund, you would need more than $14,000 to invest in those proportions.”
But fear not, there may be a simple solution: a fund of funds. Commonly called lifecycle funds, lifestyle funds, target maturity funds or balanced funds, these investment products are whole diversified portfolios. Investors can select a fund of funds based on time horizon (when you’re going to retire) or how much risk you can tolerate.
With one purchase, investors can get access to a diversified portfolio designed by professional money managers such as Old Mutual, Pioneer Investments and AIG SunAmerica, who have partnered with Ibbotson Associates to help create these fund offerings. Funds of funds can be thought of as one-stop shopping for your investment dollars. – NU
Return On Assets Is The Hit By Pitch Of Investing
Return On Assets Is The Hit By Pitch Of Investing
Despite all appearances to the contrary, this is a post about investing not baseball. So, to those of you who love reading about investing but hate reading about baseball: dont be deterred. Its worth reading all the way through.
Return on assets is the hit by pitch of investing. Common sense suggests it isnt a very important measure. Why would any investor care about return on assets when return on equity and return on capital tell you so much more?
You dont have to know a lot about baseball to know that the number of times a batter is hit by a pitch shouldnt tell you much about his value to the team. After all, getting hit by a pitch is a fairly rare occurrence. Even if some players are truly talented when it comes to getting plunked, they still wont get hit enough to make a huge difference, right?
Thats true. In and of itself, the act of getting hit by a pitch is not particularly productive. But (and heres where things get interesting), as a general rule, a simple screen for the batters who get hit most often will yield a list of good, underrated players.
Why? The most likely explanation is that a HBP screen returns a list of players who are similar in other, more important ways. Perhaps batters who get hit more often also tend to walk, double, homer, and fly out more often while grounding into double plays less often. Even a casual baseball fan might suspect this.
Since this blog is about investing rather than baseball, theres no reason for me to discuss whether such a correlation really does exist. Ill just provide a list of the top ten active leaders for HBP: Craig Biggio, Jason Kendall, Fernando Vina, Carlos Delgado, Larry Walker, Jeff Bagwell, Gary Sheffield, Damion Easley, Jason Giambi, and Jeff Kent.
After the top ten, the list is no less impressive. #11 15 are: Derek Jeter, Luis Gonzalez, Alex Rodriguez, Matt Lawton, and Barry Bonds. Since this list is based on career totals for active players, it’s biased towards players who remain in the majors and who get a lot of plate appearances. That fact alone means the guys on this list are likely going to be above average players. However, even if you look at the single season HBP list, which includes a few young players (e.g., Jonny Gomes), the guys with high HBP totals still tend to be extraordinarily productive offensively.
Simply put, screening for HBP tends to return a much higher number of bargain batters than youd expect. One explanation for this is that the good things players with high HBP totals do tend to be less conspicuous than the good things other players tend to do.
Might there be a parallel in the world of investing? You bet. So, again I say –
Return on assets is the hit by pitch of investing.
Return on assets is a good screen for high quality, low profile businesses. A high return on equity does not go unnoticed for long. Sometimes, a high return on assets does. Jakks Pacific (JAKK) is one good example of a high ROA stock. Its returns have basically been what youd expect from a toy company. That may not sound like great news to owners of Jakks; but, it is.
Jakks sells at a price to earnings ratio of about 12 and a price to sales ratio of about 1. The company has grown quickly. Over the past five years, revenue has grown at an annual rate of about 25%. Shareholders havent enjoyed the full benefits of that growth, because of share dilution but, thats something best left to a longer discussion of Jakks. The point here is simple.
Jakks may not be anything special as a toy company, but it is a toy company. Jakks past return on assets proves that simply being a toy company is something special. Jakks “normal” ROA of around 5 12% may be nothing extraordinary in the toy business; but, it is far more than what most businesses earn. If there will be any future growth at Jakks, the current P/E of 12 will be shown to have been utterly ridiculous.
If you screen for high returns on equity, you might have missed Jakks. But, if you screen for high returns on assets, youd have caught this apparent bargain. By the way, I believe Joel Greenblatts magic formula would have lead you to Jakks as well.
Village Supermarket (VLGEA) is another stock that has often earned a good return on assets, but has failed to ever earn a high enough return on equity to get much attention. This business is not as cheap as it once was; but, it isnt exactly expensive at these prices either. For at least five years now, Village has looked quite clearly like it should be valued as a mediocre business. Thats saying something, because the market has continually valued VLGEA as a sub par business; which it isnt.
In 2000, you could have bought VLGEA at a 50% discount to book value. In 2001, the average buyer still obtained shares at a greater than 25% discount to book value. By then, anyone who had been monitoring Villages return on assets for the previous five years would have known the stock was cheap.
For the last ten years, Villages return on equity has been nothing more than average; however, the performance of the stock has been anything but average. An investor with one eye on Villages price to book ratio and the other eye on Villages return on assets would have enjoyed the decade long climb without breaking a sweat.
Another one of my favorite high ROA stocks is CEC Entertainment (CEC) better known as Chuck E. Cheese. Recently, the stock has earned a good return on equity. However, a simple screen based on ROE would have brought a lot of less than wonderful businesses to your attention along with Chuck E. Cheese.
Return on assets told a different story. Chuck E. Cheese has consistently earned an extraordinary return on assets for the last decade.
Now, its true that Chuck E. Cheese has earned a very nice return on equity as well. But, if you’re an investor who knows what normal ROA numbers look like, one look at CEC’s return on assets will blow you away.
Debt can play the role of the fairy godmother. So, an investor needs to look beyond the veil of current performance. Return on assets can often provide a glimpse of what the stroke of midnight will bring. ROA is just one piece of the puzzle. But, its an important piece nonetheless.
A high return on assets doesnt guarantee quality. However, Ive found that Mr. Market has usually offered many more small, growing companies with extraordinary returns on assets than he has offered small, growing companies with extraordinary returns on equity.
Therefore, just as a general manager might want to run a quick screen for a high HBP number, you may want to run a quick screen for a high ROA number. I know its not supposed to be the best indicator of a bargain. But, in my experience, it tends to turn up a lot of neat ideas.
Obviously, a high return on equity is important. Im not saying it isnt. Im just saying a high return on assets is more important than you think.
Refinance Home Mortgage Rate
With a mortgage, you are bound to pay a considerable amount of money each month. And, a home is the biggest asset you own. This two can be turned as a wonderful idea to use your biggest property to get rid from the monthly payments for the mortgage loan. It is the refinance home mortgage rates that provide you with this opportunity. Refinance indicates fetching a second loan to pay off the first loan. In both of the cases, the loan is secured on a same property – as for a home. With the refinance home mortgage, you can use the current equity of your home; get the appropriate value of the home by shutting the previous loan based on the old equity value; and ultimately this results into saving a lot of money altogether.
However, before applying for a refinance mortgage loan, you should know all the constraints of the refinance home mortgage rate. The first and foremost point to consider is whether the total interest payment of the refinance loan saves you money by comparing to the current loan’s interest payment. And also, do not forget to add the expenditure for the refinance loan sanction with some fees and charges. If your first loan was an adjustable rate loan, and the current rate of interest is higher, then refinance home mortgage can come up as most beneficial. And same thing can be said about the fixed rate mortgages.
Refinance home mortgage rates lower the monthly payment, shortens the term period, provides a chance to switch off from adjustable rate loan to fixed rate loan, and sometimes can avail you extra cash to spend.
Refinance home mortgage rates are of two types -
(i)Fixed Rate: Here, the interest rate remains unchanged through out the term period.
(ii)Adjustable Rate: Here, the interest rate changes according to the market condition.
The investors of the second market are the key controllers of the current refinance home mortgage rates. With a flourishing economy, the future capitulates become more prospective than the present capitulates. This leads the investors to wait for the higher capitulates and leaving off the current capitulates. This results into the rising refinance home mortgage rates, because lenders restrain from presenting their loans with lower capitulates.
Conversely, with a downward economy, all the investors’ rush to purchase whatever is available at the current price to save from the future lower capitulates investments. This results into lower refinance home mortgage rates, because in this case, the investors presents low capitulates loans to avoid future lower capitulates rates. Refinance home mortgage rates are typically lesser than the original initial loan. However, there are several components on a typical refinance home mortgage rate. These include, current monthly payment, current interest rates, years left on the first mortgage, balance left on the first mortgage, the new interest rate, the new interest type, and the new loan term in years.
You must remember to add with it the other expenditures like, new loan application fees, points cash down, title search, local fees, appraisal fee, attorney’s fees, credit check, inspection charges, documents preparation charges and credit checks.
Refinance: Should you?
For the moment, interest rates remain an excellent bargain. They hover near historically low levels, but as they begin what many experts predict will be a steady, continuous rise, many consumers are rushing to refinance and lock in those great rates. Several key economic indicators are pointing to an increase in the cost of borrowing money that will probably continue over the long term. And financial analysts predict an end to those record-breaking low rates we have enjoyed for the past few years.
As interest rates go up, so will the monthly payments of those borrowers who have adjustable rate mortgages. And lots of us have those, because they proved to be a great tool for taking advantage of the rising prices of the recent real estate bull market. One of the most compelling reasons to refinance right now is to switch from those adjustable rates into loans with more predictable fixed rates. Consumers who lock in lower rates now by refinancing into fixed rate loans will save money, especially as rates on adjustable mortgages climb.
Others have debt on credit cards and other loans at high interest rates. And it is good idea to get out of those loans and into less expensive ones, too. If you currently own a home with equity, you can take out a second mortgage or home equity loan to pay off other high-interest loans. For example, if you have a credit card with 10 percent interest, and you refinance to a home equity loan at 7 percent, you automatically save 3 percent.
Use that kind of strategy now to lock in low rates and pay off all high-interest car loans, bank line of credit notes, and department store charge cards. By consolidating those debts into one single low-interest payment, you can pay off an entire basketful of high-risk loans and refinance your personal debt into a single and easy to manage second mortgage payment.
Of course there are also many homeowners who took out loans to buy property back when interest rates were higher than they are now. Those people can refinance to low rates while they still have the opportunity, and save money every month from now on, for the remaining life of the loan. By simply lowering your interest rate by one or two points, it is possible to save tens of thousands of dollars over 20 or 30 years.
When you convert to lower rates, it immediately shrinks the amount of your monthly payment. And with a fixed rate loan, your interest rate will never go up, for as long as the loan exists. Pay on it for decades, if you like. Regardless of what happens to prevailing rates and adjustable rate mortgages, your loan will remain the same. By acting now to refinance, you can reward yourself far into the future, particularly if interest rates do continue their steady rise.
Of course if you are fortunate enough to have a fixed rate mortgage that you got at an attractive rate, there is no need to refinance. You can sit back and relax, while others rush around trying to put their financial affairs in order while there is still time.