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Financially Speaking

with Ben Doherty





by Sal Giarratani

Stocks closed lower as pes- simism about the economy rose. There was no reason to buy and no reports to offset dis- appointing news on employ- ment and retail sales. Over- seas markets also fell and energy stocks were the worst performers, as overseas stock markets were weak. Some stocks such as Hewlett Packard rose, solid earnings reports as they invested in other business, which helped them. Sales-force.com, the largest seller of online cus- tomer management reported that its 3rd quarter earnings were $408-410 million and E.P.S. will be .31¢/share. In- tuit Inc. rose also on good earnings, the most in nine years, as earnings will in- crease to $3.74 billion in the next few months. Its recent purchase of Miat Personnel Finance boosted its custom- ers to over three million. Also, Akamai pushed higher on takeover rumors. Its option trading jumped to more than three times volume on specu- lation. The company, the largest supplier of software is the best performer in the S&P500 Index this year with a 78% gain. Tyco International’s shares gained as it was included in the S&P500 for next week. It re- places Smith International, which was acquired by Schlumberger, a rival. These stocks were the exceptions as there was very little good news to report last week as growth continues to slow.

The NASDAQ finished up less than 1%, the Dow slid

.6% and the NYSE Composite lost .4%. Friday was triple be- witching day as options ex- pired, which normally drives prices higher, but no follow through occured. The mar- ket leaders acted as if they were in another universe.

Many economists are pre- dicting a “double dip” reces- sion so it’s time to pick a few stocks to buy at these prices. The company that makes de- vices, pharmaceuticals and other healthcare products is Tyco International. The shares sell @ a 40% discount to what analysts think they are worth. As for banks, you might think they would get killed again if the economy heads south, as business slows and as deficits rise. But the weaker the economy is, the longer interest rates re- main low. Healthy banks can make money on the spread as (JPM) JP Morgan and Wells Fargo are my favorites. Wells Fargo (WFC) has pulled back 20% since April. Others stocks are Proctor & Gamble (PG) with an ROE of 20%. Companies that have an ROE of 15% or better are consid- ered highly efficient. Others are Abbott Lab with a 27% (ROE) and Emerson Electric with a 20% (ROE). These stocks should do well in a slow market, which we expect.

For those that live in Mas- sachusetts, tax free munici- pal bonds are attractive, which hold their value very well. By going out 15 years you can make 5% on state and agency bonds, which is equivalent to 8½% after tax.

I’ve been buying these bonds for the last three years and they are doing well. The dan- ger is if interest rates go up prematurely, they could go down in value, but no one is looking for higher rates at the present time. 8½% is a great rate and the 5% is bet- ter than U.S. Treasuries. An 8½% is the tax equivalent of 5% tax free in the state.

The centerpiece of the new financial reforms is the Consumer Finance Protec- tion Bureau (CFPB), which will write and enforce con- sumer protection rules for most loans including credit cards, student loans and mortgages. The agency will be housed in the Federal Reserve but the director will be appointed by the Presi- dent. The bureau will con- solidate consumer protec- tion staffs from a half dozen regulators and should be up and running within a year. The bureau has no author- ity over car dealers, but will apply to all banks and lend- ers with less than $10 billion in assets. The financial sta- bility can override any agency rule if 2/3 of members feel it threatens the stability of the financial system. “Con- sumers won’t have to wait for Congress to pass a law to be protected.” The CFPB is the biggest thing in con- sumer protection since the FDIC,” says Ed Miezwinski, director of the U.S. Public Interest Control Group.

It’s time to call your finan- cial advisor or call me at 617-261-7777.

Mark the


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Anchor Babies Twist Meaning of the 14th Amendment

The latest national debate is over the so-called anchor babies and the 14th Amend- ment to the US Constitution. Liberals have decided to make this a liberal issue to attack Republicans and con- servatives. Recently, Greater Boston on Channel 2 did a whole show on the subject. Supporting American birth rights for babies born in this country to illegal immigrant parents were the usual lib- eral suspects who think anti- immigrant supporters want to “repeal” the 14th Amend- ment are mean spirited to- ward innocent people trying to raise their families.

Being mean spirited has nothing to do with it. The liberal argument is that anyone born inside the US is an American and why are we trying to change the rules now that we’re talking about Mexicans flee- ing Mexico. They frame the whole question incorrectly. No one is trying to repeal the 14th Amendment or change the terminology written within it. It is clear that our founders did not sup- port the idea of granting US citizenship to those in- vading our country from places like Mexico. Right now, many babies of illegals are born within yards of the border.

One liberal spokesperson said it was silly to think par- ents would sneak over the border to have a baby just to be able to become US citi- zens. Once again, wrong idea. Illegals cross the bor- der to have their child quite often just to stay here and gain government benefits and hopefully a job too.

understanding of what the text actually means. If someone is illegally in this country, how can the legal status of citizenship be granted.

Originally, the 14th Amend- ment was written for slaves and the children of slaves following the Civil War. The text of the amendment never mentions slaves but

it was inferred authors of the 14th

by the Amend-

ment. It is amazing how the same liberals who read the Bill of Rights think babies of illegal parents are auto- matic citizens by virtue of their US birthplace while they think the 2nd Amend- ment was about a militia and not the right of individual citizens. You really can’t go both ways on two different amendments but liberals see no problem doing just that.

I can understand why lib- erals believe babies born in- side the United States by illegals should be considered United States citizens be- cause it would mean greater strength for liberals and the Democratic Party who would benefit from the growing Latino population within this country. I call it kissing up for votes. This isn’t about democracy. It is a liberal power grab dressed up in the constitution and wrapped around an American flag.

Don’t repeal the 14th Amendment, just read the thing better. The meaning within the text is clear to me and a majority of American citizens.


Of course, Greater Boston had some Tea Partier spokes- woman for the conservative side of the argument. She said at one point if we need to repeal the 14th Amend- ment, we should try. Silly talk. As I said, the problem today isn’t the 14th Amend- ment and its intent as much as the somewhat twisted


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