LIMITED PARTNERSHIPS: (WSJ) Through the end of May, New York Life had to pay about $417 million to 28,000 investors for its realty, mortgage and oil and gas partnerships it sold between 1985 and 1992. In Mid April, Kidder Peabody was sued by more than 100 limited partnerships alleging fraud, negligence, breach of contract and conspiracy. It involved an Aircraft Income Partnership which investors allege was highly risky and speculative but Peabody states was safe. It ended up that most of the airlines that leased the airplanes have gone out of business or encountered bankruptcy proceedings. Paine Weber shelled out $332.5 million regarding partnerships in real estate, oil and gas, aircraft and other types of businesses. Brokers used scripts for the aircraft units saying they"were the equivalent of municipal bonds and certificates of deposit" Are all partnerships bad? No. But brokers are not trained to judge or know risk. Therefore they sell product. If you just want to buy something, use a broker. If you want knowledge, find someone that does research- or plan to get screwed sooner or later.

ANNUITIES: (WSJ) Standard annuities have returns based on bonds yields during the accumulation stage (when you are putting money in)- though these usually vary due to yields in the economy. Upon payout, they have just one rate. Variable annuities take your money and invest into mutual funds so you can hopefully do better than the lower (normally) bond returns. During the annuitization period, the payments are normally fixed and are based on the number of people getting the payments and the period of time for payments. However, fixed payments are impacted by inflation which invariable keeps going up One company is offering inflation adjustments on its fixed annuities. They increase payments by 10% each 3 year period for the first 15 years and then increase payments annually by the cost of living- though not exceeding 3%. Worth it? Well, there's a "kicker" in that the initial annual payments are reduced. For example, a woman age 75 puts in $100,000 into an immediate annuity. She'd "normally' get $9,000 a year. But under the new inflation adjustments, she's start off with $7,000 a year. Which is better? Almost impossible to say and is based solely on how long you expect to live. With almost all annuity payouts, you'd have to live a long time.

Another problem is that fees for variable annuities have actually been increasing while the monies going into the funds has been increasing. There should be a lowering of fees due to economy of scale.

John Bogel of Vanguard funds says that the increases are due almost solely to greed. I really can't dispute that.

So, are annuities worth the trouble? Probably not, and certainly in only relatively small increments. But if you are/have a mindless spendthrift who will live forever, they are just the ticket. You effectively can't access the money during payout and your return can be extraordinary if you live a VERY long time. A very long time.

BROKER TURNOVER: (WSJ) The turnover percentage for brokers in the U.S. was about 18% annually.

XENOPHOBIA: Not too many years ago, the press was up in arms about the sale of real estate to foreign countries- particularly Japan. Actually, the percentage they bought was small. But is also happened to be at totally unsupported prices and the majority of problems that Japan has confronted in the last few years was due to excessively over priced purchases of real estate overseas and in their own county. From 1993 to 1995, sales of Japanese owned real estate has increased from $3.4 billion to $8.9 billion as they try to divest themselves of the bad investments. Their total negative exposure is about $400 billion- more than four times our Savings and Loan real estate scandal. 21 Japanese banks will write off about $108 billion this fiscal year. They're getting back about $.60 on the dollar now- up from $.50 two years ago. Who’s buying?? US pension funds who see some great deals. This sale will continue for awhile and it has sent Japan reeling. but don't count them out. They will learn like we have learned and will be a major player by the end of five years.

NEW ERA PHILANTHROPY: Remember this Ponzi scheme by John Bennet wherein he would pay a charity twice what they gave him through anonymous donors? You'd think someone would have to be stupid to play this game, but he hoodwinked some of the biggest organizations in the world. Two were Harvard and Princeton Universities who agreed to pay back $2.1 million and $467,000 to the bankruptcy trustee to settle claims. (A Ponzi scheme a is where the initial investors are paid out of funds from the later contributors. Finally the promoter can't find any more suckers so he usually just runs off with millions of dollars.) This happened in the Oakland area recently with “Friends Helping Friends” (love the name). People were taking rent money to try to make a bundle. Sad, sad, sad.

SOCIAL SECURITY: (WSJ) The number of workers that provide benefits to retirees has dropped considerably since inception.

By 2013, receipts will fall short of benefits. But "excess" savings will help it stay fluid till about 2020. (That's assuming that the excess has not already been spent by our delightful government- which it has. By 2030, SS will be broke. The article noted that by increasing the payroll tax 2.2%, split between EE's and ER's, it could stay afloat for another 75 years. Most other articles suggest putting the funds into the stock market. That does have a certain viability, but there appears to be HUGE discrepancies between amounts available for different ages upon retirement (the poor getting less), so a lot more details need to be worked out before this goes further.

ABUSE: The National Center for Elder Abuse found that female victims constituted 62% of elder abuse cases. More than 12% involved financial or material exploitation. In those cases, 62% of the perpetrators were family members. Several ways to stop some abuse

∙ Use a POD account rather than the regular joint tenancy. POD means paid on death which allows the beneficiary to receive funds but only upon death. It should stop the draining of the account while the benefactor is still alive

∙ Directly deposit social security checks. But remember, if the account is jointly held with the abuser, the financial abuse may continue.

∙ Appoint a representative payee to receive, sign and cash check s for federal benefits.

TEENY TEENY BRAINS: The American Association for the Advancement of Science says that men lose brain tissue at three times the rate of women. By the time men reach 45, their brains have shrunk and are proportionately smaller than a woman's brain. The lost tissue affects mental flexibility and attention span.

Why those ungrateful toady doctors- probably women- who are so arrogant and filled with loathing that to even remotely insinuate that men............... uh, where were we?

AVERAGE CLOSING FEES: Appraisal- $285; Request your credit record- $47; Record your mortgage with county clerk- $25; Delivery of loan documents to you- $25. Other fees such as document preparation, general processing, underwriting fees may range from $150 to $250 but should be included in your points or other fees you are required to pay. We used to simply call them garbage fees. You need to review these closely and dispute as necessary.

COLLEGE LOANS: Students with good credit will now be able to borrow as much as they need for tuition directly from a private lender- possibly with no co signor. Additionally, the Signature Student Loan Program through Sallie Mae (800 891-1409) will let students bundle all of their school loans and deal with a single lending agency even if they change schools or go on to graduate school. Interest rates will vary and, as of April, were 3.0% above 91 day T-bill rates for co singed loans (8.09%) and 3.5% plus 91 day T-bill rest for non co signed loans (8.49%). The maximum loan is $100,000 and there is a 6% application fee. Repayment does not begin until 6 months after graduation and the student has up to 15 years to pay.

Federal Stafford Loans have a cap of $2,265 for Freshman and $5,500 for seniors. The variable rate is similar to above. There is an origination fee of 4%. Repayment begins 6 months after graduation and the student has up to 30 years to repay. Banks, credit unions and other private lenders make 64% of Stafford loans; state or private agencies administer the Loans and the Federal government guarantees them. The other 36% of the loans are offered though colleges and universities that participate in the Federal Direct Student Loan Program.

Perkins loans are limited to $3,000 for undergraduates and $5,000 for graduates. However the 1995 average costs for an average private school was $19,762 (includes room and board) and $9,285 for public schools.

Plus Loans (Parent Loans for Undergraduate Students) allow borrowing all of a student's needs minus any other financial aid. Interest rates are 3.1% over the one year T-bill with a cap at 9%. Lenders can charge up to a 4% origination and insurance fee. Students have up to 10 years to repay but there is no grace period after graduation.

Excel Loans are offered through Nellie Mae. A parent can borrow up to $2,000 less any other financial aid. Interest rates are 0.5% over prime for the first year and prime plus 1% thereafter. There is a 7% origination fee and students have up to 20 years to repay.

TERI Alternative loans are available through the Education Resources Institute 800 255-8374 and is the largest private loan guarantor in the U.S. You can get up to the full amount of the education and have up to 25 years to repay. Interest rates vary from the 6 different banks.

Extra Credit Loans are offered through the College Board 800 874-9390. Interest rates are 4.5% over the 90 day T-bill and you have 15 years to repay.

QUOTAS, SCHMOTAS: (Smart Money) Two professors recently conducted a study on investments pushed by brokers at the end of a month. They studied about 100 brokers over a two year period and found that 25% of brokers exhibited a pattern of commission induced trading in order to meet their production quotas.

12b-1 FEES: These fees are annually deducted from a fund for the supposed "extra" costs of marketing. They suck. Here's how they rate per fund families.

They are used in many parts to compensate a broker for continued review of the funds. In theory, I have no objection to that at all- but just that what does a broker know about stocks or funds????? I have never taught them anything about alpha, beta, correlation, diversification or asset allocation in 15 years of training (not required for licensing). Unless they have additional degree preparation in the area of securities, it's like paying a janitor to watch a cancer patient. Doesn't make a lot of sense. No, I am not saying I am perfect when people pay me, but at least there is some skill involved.

GLOBALIZATION: (FED Board of SF) While the world is “much smaller” due to the communication age and the substantial trade between countries, the President of the SF FED Board stated that the U.S. economy is actually less integrated into the world economy than most people think. According to one estimate, 70- 80% of the U.S. output is NOT traded internationally. That means that a sizable part of our economy is not directly sensitive to foreign price factors. He further stated that, even considering the prices of goods traded internationally, the effect of U.S. prices is offset by a large extent by our flexible foreign exchange rate.

RICH ARE GETTING RICHER: (Business Week) I have read with some interest the articles that are pointing out how much more the average worker is involved in stock and fund purchases, primarily due to the increase use of defined contribution plans which cover 67 million workers. An additional 9 million have IRA's and Keoghs. These investors have poured over $55 million into mutual funds during the first quarter of 1996. Two economists said that 36 million households held some form of stock in 1992- about 37% of all households. That was up from 33% in 1983. BUT the top 5% of the households held fully 77% of all equity holdings including individual shares, defined contribution pension plans, IRAs, Keoghs, 401(k)'s and the like. The bottom 80% of ownership owned just 1.8% of the equity. This was just a slight gain over 1.08% in 1983. Directly owned stocks- as opposed to funds- the top 1/2% owned 59% of the total value. These statistics REALLY put much of the rhetoric I had been hearing into perspective. The average worker has not been helped that much at all. Not only has the distribution of income been growing more unequal, but all the effort into getting the "little guy into the game" through increased education seems to have done nothing. And the continuing unease of worker confidence (my opinion) and lack of good paying jobs (partly their fault or those of their parents for not demanding their children be properly educated) will lead to more haves and have nots. Here are some more comments about today's society

∙ Twice as may kids live in single parent homes as in the 70's. Of 66 million children, 18.5 million live in single parent homes and 7 million live in two parent homes with a stepparent.

Lastly, here is some more commentary by FED Chairman Greenspan on how rapidly changing technology effects the lower skilled worker and indicates how bad it will really get.

Wait till no later than 2010 when the social unrest of the 60's may end up looking tame.

HMO'S: Health Management Organizations have come under more and more fire recently because some of them have not offered medical care for the betterment of the patient. Articles have addressed the fact that they have withheld services or offered less than adequate service in a sole attempt to save the organization money. From my experience, I find the problems to be in the minority.But the commentary here is to dovetail with C. Everet Koop- the former U.S. Surgeon General- who has repeatedly stated that if you want the best in medical care, do some homework on yourself and medicine in general.

If you are unwilling to do some reading and assure yourself of adequate care, you may never get it. Medical care will never be the same as the cradle to the grave doctors that many elderly of the past had. It must be made- and is- more cost effective simply because we do not have the money to pay for the rapidly increasing costs of care.

LIVING: Around 3000 BC, the average life span was about 18 years. In 1900, it was 47.3 years. Now it's estimated at 76.3 years and by 2010 could be as high as 77.9. The most notable reason for living a very long time is through a proper diet. Statistics show that a person should consumer about 60% of their calories in carbohydrates, 20% in protein and 20% in fat. The source of fat should be primarily fish oil and other unsaturated fats. Maybe, but I still like the WHOPPER

AARP: The American Association of Retired Persons does a lot of good, but it seemed to me- and many others- to be a large organization mostly primed to produce money. In 1994, its endorsements for insurance products earned it $146 million- 38% of its budget. Did it endorse the right products? Debatable to many and “no” from my standpoint. Nonetheless it’s going to make a whole mess more money because it recently stated that it will lend its name to some Health Maintenance Organizations for a piece of the action. Some Congressmen want to repeal its tax exempt status for the continued and unabated effort to make more and more money. Some of it goes to help the elderly, but did anyone see the Taj Mahal office building they built???

BLOCH HEAD: Sonny Bloch was touted as a financial guru and had a major radio investment show for years. He was also a schmuck. He pled guilty to seven counts of perjury and tax evasion and still faces federal conspiracy and fraud charges. Listeners said they "trusted" him- the universal excuse and rationalization. Never trust anyone without getting a written statement of their education, qualifications and background. And NEVER, EVER, EVER, EVER give money , outside of an FDIC CD, to anyone who does not have and cannot use a financial calculator.

WEBS and COUNTRY BASKETS: These are new types of trading opportunities for single country investing on the American and New York Exchanges. They have little turnover- hence little management costs and capital gain distributions- and should trade at or near their NAV. The WEBS cover 17 different countries. I'll be looking further into these.

I'M SO LONELY: (Boston Globe) Loneliness is becoming a major health problem. In 1950, only 10% of households had just one person. In 1994, it had moved to 24%. Fewer than 10% age 25 to 44 live alone, but about 25% of those age 65 to 74 and about 40% for those over age 75. Some remain very happy- but supposedly only about 1/3. A 1990 Gallup study indicated that about 36% of Americans are lonely. More statistics:

∙ People who are isolated but healthy are twice as likely to die over a period of a decade as those not isolated. A study showed that the more isolated men are up to 25% more likely to die of all causes at any age versus non isolated men. The odds for women are 33%.

∙ People with heart disease have a poorer chance of survival if they are unmarried or do not have a partner to assist them.

∙ Women who are alone and have breast cancer live half as long as those who do not.

∙ People with malignant melanoma who participate in group intervention live longer than those who do not.

What's this all mean? I must project how long someone will live, how much money they will need and innumerable other factors affecting their lives. The use of annuities may vary radically from one type of individual to another, as will long term care, etc. It's just another issue of proper financial planning.

USE IT OR LOSE IT: While Alzheimer's may be genetically preprogrammed for many elderly, the rest of us can still increase our brain function by using the "little grey cells". A physician noted that

Between 10 to 30% of the elderly avoid disease and maintain high cognitive function. 25 to 30% who live to age 80+ will eventually get Alzheimers. The rest of the middle group may encounter annoying but not insurmountable slippage in memory and recall. Those are the ones that need to work the hardest to try and stay up with the first group.

RESEARCH: In my never ending quest for truth, justice and the American Way, I am ceaseless in reading vast amounts of material, formulas and knowledge offered by major researchers, the media and other entities of distinction. It is comforting to know that the quest is well worth the effort since one of the most important studies of our century was recently documented by a major research organization. The Hostess Company, after what must have been tireless, unnerving research, has concluded that a Twinkie takes about 45 seconds before it explodes in a Microwave. Finally, I can sleep at night.

ELDERLY SUICIDE: Though suicide for the elderly dropped for four decades, it climbed about 9% between 1980 and 1992. Those over 65 make up about 13% of the nation’s population but account for 20% of its suicides. Some might think part of the increase is due to acceptance of suicide through the right to die initiatives, living wills, the publications of Last Exit in 1991 and the press of Dr. Kervorkian. Not really. The bulk of the increase is due to the increasing and insidious depression among elderly white men. Depression kills.

S&P INDEXED ANNUITIES: In the industry's never ending quest to sell more and more products, it came up with the equity indexed annuity. Instead of a yield based on bonds, the return is on (normally) the movement of the S&P with certain caps and floors. But there are several methods that the companies use and they all can be somewhat confusing. For example, one company provides a return equal to the S&P of the previous year, times a participation rate which is then adjusted, as dictated under the contract, to be not less than zero- or other floor- nor higher than the CAP or maximum rate (say 14%). Suppose in year 1, the S&P goes up 20%- the client would get 14%. In the second year, the S&P did a -10%, but the client would just show no return at all due to the zero floor. In year 3, the S&P went up 20%- the client would get 14%. By compounding the money, the client would end up in the 3rd year with about 30% higher funds than when he started.

Other companies use a return based on the S&P's actual index. If the index was 500 when the contract was issued and 750 at the end of the 3rd year the account would have grown 50%. But they have a participation factor of 80% reducing the growth to 40%. The problem here is that if the S&P stays at 750 for, say, 10 years thereafter, the return never goes up any further until the S&P goes higher.

Another company converts the return to a compounded rate of return and subtracts a yield spread. In the above example, the return over 7 years could be equated to a 6% compounded rate of return. Subtract the 2.5% yield spread and you end up with 3.5% yearly return- not exactly something to write home to Mother about. There's more: Surrender charges are applicable to literally all annuities- and certainly to these. The surrender value might be the 90% of the premium accumulated at a 3% interest. That could be pretty hefty.

So did you grasp much of that? Probably not, but I bet that literally no other investors did either. And if you cannot reasonably understand an investment or if the agent cannot provide an intelligible analysis, it probably shouldn't have been purchased. Nonetheless, unsophisticated investors finally joined the market after the tremendous returns from the market in 1995. Debatable if they know they must play the game for a long time. Indexed annuities are long term investments with high surrender charges, no step up in basis, 10% penalty for distributions before 59 1/2, etc. And over the long term, the annual compounded rate may only be slightly higher than that earned on a regular fixed annuity. Further, much of the return may be lost if the funds are subsequently paid out as an annuity when rates are historically very low and/or you must live for a very long time- the same as indicated previously. Annuities are not necessarily conservative investments.

HOME SALES: A number of people comment about the eclectic mixture of material in the newsletters. However, I submit that this is what Financial Planning is all about- not just a focus on investment advisory work. In any case, here is a chart on national housing prices since 1981. Look to the drops in the Northeast and West in the early 90's. (National Association of Realtors)

1981	66,400	63,700	54,300	64,400	96,200
1982	67,800	63,500	55,100	67,100	98,900
1983	70,300	72,200	56,600	69,200	94,900
1984	72,400	78,700	57,100	71,300	95,800
1985	75,500	88,900	68,900	75,200	95,400
1986	80,300	104,800	63,500	78,200	100,900
1987	85,600	133,300	66,000	80,400	113,200
1988	89,300	143,000	68,400	82,200	124,900
1989	93,000	145,200	71,300	84,500	139,900
1990	95,900	141,200	74,000	85,900	139,600
1991	100,300	141,900	77,800	88,900	147,200
1992	103,700	140,000	81,700	92,100	143,800
1993	106,800	139,500	85,200	95,000	142,600
1994	109,800	139,100	87,900	96,000	146,700
1995 EST	114,200	135,100	95,800	99,400	149,400

This is somewhat distorted since Northern California has experienced some rebirth, but Southern California is still in the dregs. But it does help put regions in perspective.

PRACTICE MAKES PERFECT: Well, not quite perfect, but pretty good. A study of hospitals and surgeons shows that where the largest numbers of particular operations are performed, the lower the death rate

Why the commentary? First it puts conjecture and innuendo into absolute numbers where you can see whether experience counts. Though the statistics are from individual studies, they should be fairly valid overall and a real help to those who need surgery and are wondering about the odds of survival.

As far as my business is concerned, some of the numbers also relate. The more you do, the more successful in a particular fashion you're apt to be. But what I want to reinforce is that the above physicians were at least trained to perform the surgeries. They were knowledgeable and most are hard working. In my business, you do find the hard working. Maybe 50%. But you don't find too many that are knowledgeable. Maybe only 8% of the remaining 50. And of those, maybe only 10% are formally trained in the activities they perform. That finally leaves 0.4 out of 100 that are capable of doing the job. And if you don't seek them out, your "survival"rate with money may be dismal. Comforting, isn't it??

IPO's: (WSJ) This commentary dovetails with commissions and the conflict of interest. Two researchers reviewed the recommendation practices of 14 large underwriters regarding the IPO's they underwrote during 1990 and 1991. Essentially, firms that made recommendations on issues they underwrote BOMBED. Companies that were independently rated did much better. After a one year period of time, companies rated NON independently trailed the market by 8% while independently rated were ahead of the market by 21%. After two years, the non independently rated companies lagged the market by 15% while independently rated companies BEAT the market by 42%. Or in other words, 12 of the 14 biggest underwriters were much better at analyzing someone else’s IPO's. Surprising? Shouldn't be. The more "in house" the product is, the more apt it is to be rated high. The greater the conflict of interest.

CONTRACTORS: People always tend to complain about contractors who do not complete work on time- or even worse- just take most of the money. One of the main problems is that they don't check to make sure they are using a LICENSED contractor- many opt for the cheapest bid they can find and then wonder why they got screwed. The DRE noted these main problems that consumers have with contractors

∙Notice regarding owner's right to require a performance and payment bond not included.

TV: American kids spend and average of five hours in front of a TV for every three in school. According to TV Free America, half of America's school children have TV's in their rooms.

NATIONAL RIGHT TO LIFE COMMITTEE: 419 Seventh St. NW, Ste 500, Washington, DC 20004, 202 626-8800. Opposes abortion. Has info and publications

BARTERING: Maybe you'd like to trade services for something you need instead of paying cash. Contract these firms for a local exchange.

International Trade Exchange, 2080 Peachtree Industrial Ct., Suite 110, Atlanta, GA 30341 770 458-6135

American Trade Exchange, 27801 Euclid Ave. Ste 610, Euclid, OH 44132 216 731-8030

Business Exchange International, 600 S. Carson Ave. Ste 312, Los Angeles, CA 90036 213 935-2929

National Commercial Exchange, 106 Four Seasons, Ste 107B, Chesterfield, MO 63017 800659-6578

Barter Systems International, 4254 Gatecrest, San Antonio, TX 78217 210 650-9300

Cascade Trade Association, 21400 International Blvd., Ste 207, Seattle, WA 98198 206 870-9290

VIATICAL SETTLEMENTS: This refers to the purchase of a life insurance policy from a terminally ill person. Prices vary tremendously as does the quality of companies. Numerous emotional and financial issues need be considered. Caution advised.

American Council of Life Insurance, 1001 Pennsylvania Ave. NW, Washington, DC 20004-2599

The FTC has a free brochure called Viatical Settlements: A Guide for People with Terminal Illness. Send a postcard to Viatical Settlements, Federal Trade Commission, Box P, Room 403, Washington, DC 20580-0001

National Viatical Association, 1200 19th St. NW, Ste 300, Washington, DC 20036, 800 741-9465 offers a free list of its 14 members that buy life insurance policies from the terminally ill.

Viatical Association of America, 1200 19th St. NW, Ste. 300, Washington, DC 20036-2422, 202 429-5129 has information on 30 companies- about half of all in existence.

A few listings of Viatical companies are shown below. However prices will vary considerably, so at least three "bids" are suggested. Those with "F" are funding companies which means they have their own source of money to buy polices. Those with "B" match polices with other investors and act as Brokers. All of those below are licensed in California. Always check licensing requirements in each state. State Insurance Department phone numbers are listed in this Guide.

Dignity Partners has recently indicated it is curtailing its business in California since new and effective AIDS drugs will probably reduce the need for a number of its settlements.

IT’S THE DEFICIT, STUPID!: For all the rhetoric of the candidates, they have conveniently forgotten why the government shut down last year. To balance the budget. Along with low inflation, a balanced budget could do more to assure future generations of reasonable financial security- and a stable economic market. Admittedly, the deficit is down a bit from late 1995, but that is primarily due to a continuing strong economy along with significant capital gains from sales of stock. But put a slower economy and a slower stock market and our deficit pops up again. An article in the SF Chronicle says that the deficit is about $130 billion (Business Week says $164 billion!). But that’s using some fancy foot work including the inclusion of the current surplus of Social Security. (The surplus is illusionary. The trustees of the Social Security System estimate that revenues will fall short of scheduled outlays by about 30% between 2019 and 2043. Some say as much as 40%) Take that away and we have a deficit more likely around $220 billion. If you added in the pensions for government and military recipients, it’s closer to $400 billion. And from the NY Times, here are some more interesting facts that dovetail with retirement planning. According to their article, baby boomers are still not saving enough money for retirement- approximately 35.9% of the amount necessary to maintain their current style of living in retirement (scheduled for about 17.5 years after retirement at age 65.) So they need to increase savings, but the country needs to decrease spending. If you left social security intact but increased income tax by 63% to 2009 to balance the budget, baby boomers would only be 26.8% close to their goal. How about letting the deficit continue but increasing taxes 31.5%? Well, the baby boomers get closer at 30.7%, but it’s still not good. How about simply cutting social security by 70% to balance the budget? While that does help but not much since its gets them to now only 15.2% of their goal. And if you cut social security by 35% and let the deficit continue, boomers are still at 21.7% of their goal. So is everything lost? Nope, but only if some significant changes happen fairly soon. The entire tax code has to change to eliminate most of the writeoffs that society has allowed. Now that won’t eliminate mortgage deductions (though it might be topped at $500,000) but other deductions would be lost. Social Security would need to be revised to later years- maybe retirement could not happen to age 70 for those born today. Capital gains would probably be lost. All in all however, the changes would reflect a stronger, healthier economy and savings rates should increase substantially. Once you have reasons for higher savings rates, the rest will fall into place and might work.

COMMUNITY PROPERTY: If you are married in the states of California, Nevada, Louisiana, Wisconsin, Texas, Arizona, Washington, Idaho or New Mexico, definitely look at the titling of property as community property. There are significant tax advantages this way. Also even if you move to a non community state, previous property may be able to retain this characteristic. Check it out.

HEALTH CARE DIRECTIVE: The American Bar Association, American Medical Association and AARP have developed an "advanced directive" when you need/want someone to speak for you in case of a serious illness. Request Shape Your Health Care Future from AARP Fulfillment (EE0940), 601 E. St. NW., Washington, DC 20049

ABUSIVE BROKERS: A year long study by the SEC, NASD, NYSE and state regulators showed that inadequate background investigations keep problem brokers employed and continuing to abuse their clients. A review of 101 small and medium firms found problems at half the branches. You don't suppose it has anything to do with the commissions they bring in, do you?

ALZHEIMERS: One set of scientists claim that they now can use brain imaging and see the approaching effects of Alzheimer's at least a decade before the victim feels any effects. They cannot predict when the disease will actually happen nor are they able, at this time, to do anything about it. Another group says they have a 95% accuracy in determining the disease in 60% of the patients with signs of dementia. My question might be- should a nursing home or insurance company be privy to that information before deciding to admit or insure an individual? Where do the rights of the individual start and stop?

COLLEGE: Half of the first time students at Cal State University need remedial English and math training. The numbers this years were higher than last and increase annually from when the study started in 1989. Remedial education costs the 326,000 CSU system about $10 million a year. A further point- if this represents the capability of people entering college, imagine what the competency of those that just made it through high school. SCARY! Is it the fault of the school system overall? Partly. TV? Absolutely. Less involvement by the parents? By George, I think you got it!

MUTUAL FUND EXPENSES: The expenses to run and manage a fund have been increasing during the last decade even while the size of the funds has increased almost exponentially. They should have been gong down. Anyway, per Kiplinger's here are the average expenses ratio for the various fund categories. If your fund has higher expenses, it doesn't mean they are necessarily bad but it should give you cause for further review.

NEW TECHNOLOGIES: (WSJ) The United States creates more new technology businesses that any other country- a trend that will continue. “Our system provides capital more quickly to people willing to take big risks... and our economy is reaping the rewards”.

BROKER PROBLEMS: (WSJ) The article noted that the major reasons for problems in the industry were due to

● Cold calling violations or deficiencies were found in about ½ of the branches that made unsolicited calls

PREGNANCY: I had been reading that the rate of pregnancy was dropping, but apparently that's all wrongs since a Federal report showed that pregnancies and abortions rose markedly in the 80's. In the 80's, about 800,000 teens become pregnant each year and 95%, at least, are unintended. These rates are higher than most other developed countries. Why the comment? Outside of the obvious societal problems, the cost for such pregnancies is in the billions and could be far better spent elsewhere. I do note however a very positive governmental response to at least part of this problem. And unwed teenage mother MUST live with a parent or approved guardian in order to receive welfare. Further, they must also go to school or get a job in order to retain benefits. I guarantee that will reduce the pattern of abuse of simply getting pregnant in order to get on the dole.

AMERICAN ADOPTION CONGRESS: 1000 Connecticut Ave. NW, Ste. 9, Washington, DC 20036, 800 274-OPEN. Info, seminars, publications