Andrew Szabo CFA is managing director of Greenwich Financial Management Inc., a registered investment adviser. Questions, call 531-2877 or e-mail
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. Previous columns may be found at Blog.GreenwichFinancial.com.
Should you convert to a Roth IRA?
Written by Andrew Szabo
Thursday, 19 November 2009 00:00
With a Roth IRA, contributions are not deductible, but — beginning at age 59.5 — distributions can be taken income tax free. Also, there are no required minimum distributions (RMD’s) after retirement. A Roth IRA thus contrasts with a traditional IRA, where certain contributions are eligible for tax deduction, but where those pre-tax monies and any gains upon them will be taxed as ordinary income upon ultimate distribution, and where RMD’s begin at age 70.5.
Wisdom on value investing
Written by Andrew Szabo
Thursday, 12 November 2009 00:00
There is a pun in the title of the new book, Wisdom on Value Investing. The author is Gabriel Wisdom, and what he sets out is wisdom concerning the “value investing” style.
China scours planet
Written by Andrew Szabo
Thursday, 05 November 2009 00:00
We recently discussed China’s nervousness about the safety of United States assets, which has been reflected in lesser demand for U.S. treasuries and agencies and a shortening of maturities they are willing to buy. While the Chinese have been losing appetite for any more servings at the all-you-can-eat U.S. Treasury banquet, they have been buying raw materials, resources and precious and non-precious metals voraciously. These two trends are organically connected.
Amazing Amazon
Written by Andrew Szabo
Wednesday, 28 October 2009 23:00
Amazon released quarterly earnings, which were up a remarkable 62% versus last year’s (weak) third quarter. The announcement, made after trading hours on Oct. 22, caused shares to surge almost 15% in after-market trading (from $93.45 to $107.07) and to close the following day at $118.49. The lowest trade for this stock in the past year was $34.68 (Nov. 20, 2008). If you like to kick yourself in the pants for missing a big one, this stock will suffice. The impressive results give evidence both of resurgence of consumer demand and of Amazon’s fundamental strengths as a retailer.
Another shocker
Written by Andrew Szabo
Wednesday, 21 October 2009 23:00
After the Bernie Madoff revelations, one might have feared that we are hopelessly jaded by financial intrigue. Then along comes the Galleon insider trading story. It restores faith in Wall Street’s continuing power to shock.
China rumbles currency markets
Written by Andrew Szabo
Wednesday, 14 October 2009 23:00
For many years, the U.S. Treasury has taken the position that China artificially maintains its currency (called the Renminbi, or RMB) at a low value in order to give its exporters a competitive edge, making Chinese exports cheap to overseas buyers while keeping imports expensive in China.
Bed of nails
Written by Andrew Szabo
Wednesday, 07 October 2009 23:00
In early 2007, we featured a six part series on the leveraged buyout boom that figured so large in corporate finance at the time. While recognizing that leveraged buyouts could bring needed improvements to badly run companies, we warned: “Whatever Wall Street advises, it then over-advises. The fierce competition among the proliferating LBO sponsors is leading to signs of excess. Such excesses could negatively affect the performance of the sponsors and their lenders (the banks and junk bond investors), while leaving some shareholders feeling better about having taken quick buyout gains while available.” That conclusion was timely.
Investor perspective: The threat from Iran
Written by Andrew Szabo
Wednesday, 30 September 2009 23:00
History always repeats itself, said Karl Marx, the first time as tragedy, the second as farce. In contemporary Iran, it’s vice versa: the farce is making way for a tragedy.
Slice and dice: How to make a re-REMIC
Written by Andrew Szabo
Wednesday, 23 September 2009 23:00
Like the legendary snake that swallows its own tail, “Re-REMICs draw their collateral from old REMICs. The acronym stands for Real Estate Mortgage Investment Conduit. In this final installment of our series on financial innovations, we will discuss how Wall Street chefs prepare this exotic new dish for investors.
New on Wall Street: Synthetic life insurance
Written by Andrew Szabo
Wednesday, 16 September 2009 23:00
Wall Street firms have recently begun to package life insurance policies into securities, as I discussed last week. There are also ongoing efforts to create “synthetic” (artificial) securities based on mortality (death) statistics. Investment banks can structure synthetic mortality securities in various forms, including mortality “swaps,” options, swaptions and futures. Such securities must track some credible “index” of mortality that tracks a sample group of lives into the future.
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