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The following archived newsletter contains links to news stories that may have been updated since they were published.
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Fiasco Trade of the Day http://www.fiasco.ca
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Friday, December 20 2002,
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Dear Fellow Trader,
Using his proprietary trading system, Thierry Martin has identified a stock which he believes will trade higher within the next few days.
STILWELL FINANCIAL (NYSE - SV)
TARGET= + $1.00
Stilwell Financial Inc. is a diversified, global financial services company with operations through its subsidiaries and affiliates in North America, Europe and Asia. Stilwell's subsidiaries and affiliates are engaged in a variety of asset management and related financial services to registered investment companies, retail investors, institutions and individuals. The primary entities comprising Stilwell, as of December 31, 2001, were Janus Capital Corporation (Janus), an approximate 98%-owned subsidiary (prior to the conversion of Janus to a limited liability company); Stilwell Management, Inc. (SMI), a wholly owned subsidiary of Stilwell; Berger Financial Group LLC (Berger), of which SMI owns 100% of the Berger preferred limited liability company interests and approximately 87% of the Berger regular limited liability company interests; Nelson Money Managers Plc (Nelson), an 81%-owned subsidiary, and DST Systems, Inc. (DST), an approximate 33% equity investment owned by SMI.
For the nine months ended 9/02, revenues decreased 27% to $896.5 million. Net income fell 83% to $39.7 million. Revenues reflect a decrease in average assets under management. Earnings reflect an increase in interest expense and severance costs.
Yahoo Chart - view recent trend of STILWELL:
http://fiasco.ca/r/yahoo_chart_sv/
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Wall Street Trader's Column
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Buy Alert! APOLLO GROUP INC (APOL) Nasdaq Report No. 1667
Analysis by: Harry Aloof DECEMBER 20, 2002
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APOLLO GROUP INC (APOL-Nasdaq): Technical Viewpoint: From a low of $37.25 on Nov 4, 2002 prices rallied, reaching a high of $44.36 on Nov 25, 2002. A decline saw prices pull back, reaching a low of $39.97 on Dec 13, 2002. Another rally saw prices penetrate resistance line "A", closing 12/19/02 at $44.50. Technicals: MACD-Histogram (MACD-H): A Buy Alert! was given on Dec 19, 2002 when the Histogram crossed the "0" line to the upside. Support: Remains at $40.25. Resistance: Is at $46.15. Point & Figure: Reversed to the upside on Dec 18, 2002. A P&F downside reversal takes place at $42.75. Summary: Technical indicators have turned bullish. BUY! APOLLO GROUP INC (APOL-Nasdaq) @ $45.38 Stop: Use a protective stop of $43.38. APOLLO GROUP INC is currently trading @ $44.50 plus $0.92 on Dec 19, 2002. Price Objective: $65.50. Risk/Reward: $2.00 VS. $24.12. Today's Risk Reward Ratio: 12;1
To view the above report with charts click here:
http://www.fiasco.ca/r/wall_street_traders/
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The Blue Money Report A Taxing Situation, part 2
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by Paul Petillo / Managing Editor
http://blue-money.com
Today's Commentary: 12.18.02
Note from the Editor: This is the second in a three part series on taxes. This column deals with Four basic rules you follow from an investment standpoint. On Monday, I will offer some useful ideas about your protecting your income as you prepare for year end and 2003.
Rule Number One.
There is no better investment or tax break, for that matter, than the availability of a tax deferred account such as an IRA or a 401(k).
In the case of the IRA, the $3,000 a year contribution should never be ignored. If you haven't participated in a company sponsored retirement plan, or if your income falls below $34,000, $54,000 if you are married, this payment is one of the most important you can make. A simple weekly $57 payment can achieve this all important tax deduction and give you a key component to your retirement plan. If you haven't made a contribution yet this year, to catch -up in time for the April 15th deadline that figure jumps to a little over $210 a week in order to make the maximum contribution for the 2002 tax year.
One piece of good news is the opportunity now allowed those who have fallen behind in their retirement plan or who by age 50, haven't contributed enough. These folks will be allowed to load their accounts in an effort to catch-up by making an additional $500 a year payment.
Another note about IRAs and company sponsored plans: You may be allowed to contribute a percentage of the $3,000 even if you are a member of such a plan. It is a complicated formula but your accountant should be able to help you.
401(k) plans are too often ignored when in fact these plans can be calculated to provide you with the necessary cash allowed to exist day to day. It may not be the full amount allowed, but this pre-tax contribution is an invaluable tool even if employers have ceased with matching funds. In some cases, a portion of your pre-tax income designated to such a plan may even increase your after tax income because of a reduction in your overall taxable income.
Either way, you can contribute up to $11,000, which seems like a lot but shouldn't stop you from making something. But if you are able to make that contribution and haven't yet, get with your employer and ask if you can make a catch-up payment. Can you say year-end bonus?
Rule Number Two.
The idea of converting to a Roth may or may not have crossed your mind. A Roth can be a sneaky little benefit for tax payers because when you are eligible for withdrawals, the tax has been paid. This post tax contribution won't help you now, but now might be a good time to make the conversion for two reasons: In many funds, the losses you have suffered may offset the tax penalties you will need to pay if you convert. The penalty will be assessed against contributions and accumulated earnings up to that point. (Or you could leave your traditional IRA alone and open a Roth account. There is no penalty against this.) The second benefit of a Roth is in the issue of estates. A Roth is a better plan to pass onto heirs because there is no forced requirement for withdrawal. And the big bonus comes from the fact that the taxes have been paid and your heirs are not liable to pay them again. "A fine is a tax for doing something wrong. A tax is a fine for doing something right."
~ Anonymous
Rule Number Three
If you have been an investor in the stock market and have experienced losses, now is the time to sell to offset capital gains. This is handy exemption against ordinary income also for up to $3,000 of losses ($1,500 if married and filing separately). Any losses greater than that can be carried forward against income or capital gains until the losses are used up.
According to the accounting firm of Bottaini, Galluci, and O'Hanlon, capital gains or losses on the sale or trade of investments should be either classified as short term (held less than a year) or long term. Mr. O'Hanlon points out that even though these two types of losses or gains are subject to different rates in the event of a net gain, "a net capital loss resulting from either category can work to your advantage". The reason he says this works is due to the long term capital gains tax rate is generally lower than the rates of ordinary income. yielding greater relief for those losses.
Rule Number Four
While we are on the subject of investments and taxes, your mutual fund has a tax liability that could have a negative effect on you. If you own a mutual fund outside of a retirement plan, you need to be aware of the distribution date. This is when your fund pays its taxes on their capital gains or dividend payments. The fund itself may have stayed in negative territory all year long, but those taxes still need to be paid. If you can, find another fund in a different fund family and sell those assets buy purchasing a different fund. You must remain in that other fund for at least 31 days but be sure that the fund you are buying isn't about to do the same thing. If it is, purchase it after their distribution date to avoid paying taxes for their capital gains.
It is also important to note that Rules Three and Four might have you dealing with what is called a "Wash Sale". Essentially, when you sell a security at a loss, andx within 30 calendar days before or after that sale - you buy substantially the same security, you have made a wash sale.
The IRS views that pair of transactions as a wash because although you had a loss on the sale, you also went right ahead and bought the stock, or very similar stock, to replace the shares you sold. The IRS suspects that you only did the two transactions in order to claim a loss on your return, without actually letting go of the stocks. That?s why you can?t take a deduction for a loss on a wash sale.
Wash sales also violate Section 9(a)(1)(A) and Rule 10b-5 of the Securities Exchange Act of 1934 if the purpose of the trade is to create a false or misleading appearance of active trading in a security. The law suggests that in a wash sale you are only pretending to sell at a loss.
Be careful of the Wash Sale Window. If you sell stock for a loss, you should not buy substantially similar stock within the wash sale window. The wash sale window consists of 61 calendar days - 30 days before the sale date, and 30 days after.
Feel free to write anytime.
editor@bluecollardollar.com
Paul Petillo
Editor/The Blue Money Report
http://blue-money.com
COPYRIGHT 2002 THE BLUE MONEY REPORT - ALL RIGHTS RESERVED
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MARKET INSIGHT: Separating Hope from Reality
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By Jody Osborne, Optionetics.com
12/18/2002 5:00:00 PM
Hope is a great thing to have in life, as it allows individuals to dream and strive for something better. However, one place hope is not appropriate is in the options trading game. Let me clarify this because hope is appropriate if it doesnít influence your trading decisions.
Websterís defines hope as ìto wish for something with expectation of its fulfillment.î In this case, hope is appropriate if it comes from research and logical expectations. Where hope is a detriment is when it leads to wishful thinking. There is an old idiom of ìhope against hope, - which is defined as ìto hope with little reason or justification. - What we want to avoid in our trading is to
"hope against hope."
None of us would trade options if we didnít ìhopeî it could result in profits. However, we need to back up this hope with the proper work and discipline. Some of us commonly use ìreligiousî trades, which are ones that we pray will change direction so that we donít lose money. There is a time to hope and a time to cut your losses and refocus. Hope should be part of the trade before we enter it, but after entry, we need to trade with as little emotion as possible.
During my younger years, I found that having made thedecision not to do drugs before I was ever presented the opportunity to try them made it much easier for me to say no when they were offered to me in front of my peers. We need to also make up our mind about exiting a trade ahead of time. This way the emotion is taken out of the trade. It is amazing how optimistic we can become when a trade is losing money. In fact, we also become very optimistic when a trade is making money. In both of these situations, we need to have an exit point ahead of time. I donít know how many times I lost money on a trade because I had no exit strategy. If the trade was making money, I held onto it in hopes of higher prices. The opposite also held true, as I refused to exit a trade for a loss, ultimately resulting in a total loss come option expiration.
I "hope" that each of us will do the research necessary to feel confident in our trading decisions so that we donít end up hoping our trading account away.
Jody Osborne
Senior Writer & Options Strategist
Optionetics.com
More articles here:
http://fiasco.ca/r/optionetics_articles/
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