MOODY'S REVIEW

SEPTEMBER 2001

COMMENTARY ON INVESTMENT AND PLANNING ISSUES ERROLD F. MOODY JR.

MASTER OF SCIENCE IN FINANCIAL PLANNING

LIFE AND DISABILITY INSURANCE ANALYST

REGISTERED INVESTMENT ADVISER

WWW.EFMOODY.COM

WHAT A LOVELY NEST: The U.S. Census Bureau reports that about 18 million adults ages 18 to 34 live with their parents, up from about 12.5 million in 1970. And a lot more are going there with the downturn.

PROPERTY INSURANCE: (Weiss) 65% of residents in hurricane-prone states are covered by just eight P & C insurers...State Farm,  Allstate, Zurich, Nationwide, Citigroup, USAA, Safeco, and  Liberty Mutual. At yearend 2000, the same eight insurers above controlled a record 58% of the  homeowners market, compared to only 26% in 1965, while State Farm and Allstate have increased their market penetration even more dramatically -- up from just 6% of the national market in 1965 to 33.3% in 2000.

HERE'S WHAT IT MEANS TO BE A MEDICAID PATIENT IN MOST STATES:

* You can't get into strictly private-pay facilities that don t accept Medicaid patients.

* Medicaid pays very little for home health care, so being on Medicaid in most states means being in a nursing home. . . .

* Medicaid pays less than private-pay rates in most states, so the waiting lists are long-for Medicaid patients.

* You have to go wherever there is a bed, which could be hours away from your family.

* If a facility doesn't accept Medicaid and you run out of your own money, you can be required to move to a facility that accepts Medicaid, and that's a hard situation for families to deal with.

* Nursing homes that operate with predominantly Medicaid patients don't have as much funding as private-pay facilities to upgrade services, furnishings, etc.

* You simply don t have as many choices as a private pay patient--a private room, for example, is not allowed-- because as a Medicaid patient, you aren't paying the bill.

"Usually, you know a hot sector after the fact, not before."

Marshall Blume, finance professor at the University of Pennsylvania's Wharton School.

CARING: (National Council on Aging (NCOA). Today more than 25 million Americans provide 80% of home care to infirm or ailing family members, with more than 7 million caring for relatives who live hundreds or thousands of miles away.

IT'S A LIE- the new brochure from the CFP Board states, "After hiring a planner, a consumer should expect a competent, diligent professional, who treats them fairly and respects their privacy. Above all, a consumer should expect integrity from an adviser. "Trust between you and your financial planner is central to a successful financial planning relationship," reads the No. 1 expectation in the brochure."

The Board has, almost from its inception, acknowledged, condoned and effectively promoted illegal and unethical planners throughout its ranks- including its officers and directors. I watched a previous Board President state to regulators regarding compliance to the law, "so what's the big deal?". Another lied to regulators in an attempt to generate an exemption for CFP's (I also have it in writing). There are no CFP's- save for myself - in California that can legally charge a fee for financial planning advice. No NAPFA members, no CPA's. Officers have stated that the state gave them an exemption (straight out lie). There are 32 states that have specific laws regarding fee planners- even those with fee and commission (Currently, 32 states have licensing requirements for advisers who want to provide fee-based insurance advice. They are Arizona, Arkansas, California, Connecticut, Delaware, Florida, Georgia, Idaho, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Oklahoma, Oregon, Puerto Rico, South Dakota, Texas, Utah, Vermont, Virginia, Wisconsin, and Wyoming.) An attorney for the Board stated they ".... will not enforce an ethical violation unless preceded by a legal one." The current president starts off by replying to me regarding ethics, "I am not an attorney......" clearly misses the mark about ethics. Ethics starts where the law leaves off. That's what integrity means- an element of fiduciary responsibility far beyond just being legal- certainly being illegal. The integrity the Board addresses has been nothing more than a deception to the public.

"Being ethical is professional but the gesture goes beyond the mere compliance with law. It means being completely honest concerning ALL FACTS. It means more than merely NOT telling lies because an incomplete answer can be more deceptive than a lie."

Integrity means avoiding any communication that is deceptive, full of guile or beneath the dignity of people. "A lie is any communication with intent to deceive." Whether we communicate with words or behavior, if we have integrity, our intent cannot be to deceive.

Stephen R. Covey.

FUND FEES: About half of all funds charge shareholders at least 1.4 percent of their assets each year -- or $1.40 for every $100 invested. That is an increase of almost 10 percent since 1995, when the median expense ratio of all funds was about 1.27 percent. Excluding shares sold to institutions, the median last year was even higher: $1.55 for every $100 invested. 

STUPID OLD PEOPLE: Many seniors don't understand that Medicare or their Medicare Supplement Insurance won't help them pay for their long-term care needs. According to a CareQuest study, nearly two-thirds of people who are 65 and older either do not know, or have incorrect information about Medicare coverage for long-term care.

I really get annoyed by this since most people do not read. Literally every major county has an Area Agency on Aging. All sorts of info is available for free. But apparently 2/3rds of Americans don't think it is worth the effort to visit or phone. And about 50% of Americans overall don't think that reading provides much value. Well, bad things are apt to happen when you don't have a clue to what is going to go on and make no effort to do any research. Stupid should hurt.

The GE Center for Financial Learning says only 7% of Baby Boomers have an adequate LTC plan in place.

LOAD FUNDS DO BETTER? 60% of all mutual fund assets remain invested in load funds. (NY Times) Past academic studies have shown that the average load fund manager performs no differently than the average no-load manager. That is already bad news for load funds, because it removes the performance-based justification for investing in them.

But recent studies note that even before the impact of loads, the average load fund underperforms the average no-load. After loads are taken into account, needless to say, the average load fund lags far behind.

A 1996 study by Mark Carhart examined all domestic diversified equity mutual funds from January 1962 to December 1993. Little noticed at the time was Mr. Carhart's discovery that the average load fund lags behind the average no-load by approximately 60 basis points a year, even before loads are taken into account -- equivalent to more than 6 percent over a decade. (See, "On Persistence in Mutual Fund Performance," appeared in the March 1997 issue of the Journal of Finance.)

Matthew R. Morey, a Pace University finance professor, focused on all domestic diversified equity funds existing at the end of 1992. (His working paper, "Should You Carry the Load? A Comprehensive Analyst of Load and No-Load Fund Out-of-Sample Performance," is at papers.ssrn.com/sol3/papers.cfm?abstract_id=265133.) Two factors conspired to keep this result hidden from researchers for so many years.

The first is a statistical flaw known as survivorship bias. This creeps into any mutual fund research that focuses only on funds that exist today (the "survivors") and ignores those that have gone out of business over the years (the "nonsurvivors").

Serious as survivorship bias is, it still would not have affected comparisons between loads and no-loads if not for the fact that more load funds go out of business than no-loads. In fact, according to Mr. Carhart's study, more than 90 percent of funds that went out of business from 1962 to 1993 were charging either a front-end or a back-end load at the time they disappeared.

If these two studies had not corrected for survivorship bias, we might not have known that the typical load fund underperforms the no-load. But now that we know, we face another mystery: Why hasn't the intense competition among mutual funds for investors' assets removed this performance difference?

At least two factors are involved, both revealing much about the psychology of investing.

The first is that the payment of a load discourages investors from switching to another fund. That, in turn, helps to immunize inferior load funds from the redemptions that equally inferior no-load funds would experience. As a result, load funds are relatively invulnerable to the competitive pressures that otherwise might eliminate the performance difference.

How much more reluctant are load-fund investors to switching? One gauge is the average time that investors hold on to load and no-load funds. According to Dalbar, a financial research firm based in Boston, the average load fund investor in 1996 held on to his equity fund for 3.2 years, in contrast to 2.9 years for the typical no-load fund investor.

Undoubtedly, many psychological motivations influence load-fund investors to hang on to their funds. Maybe some investors see load funds as well worth the extra cost, because of the help they receive from the sales representative. If so, it would take poor performance over a sustained period to persuade investors to switch.

But investors are often reluctant to switch even if they place no value on the hand-holding they receive and even when their fund is a poor performer. This is because of cognitive dissonance, a universal psychological trait that makes us loath to acknowledge our mistakes -- even to ourselves. Load- fund investors thus hold on longer than they would otherwise in order to avoid the painful realization that the money paid to the fund's sales representative was a total waste.

A second factor is related to the first. Load-fund investors' reluctance to switch has helped them at the same time that it has hurt them: They tend to have a higher average exposure to equities than do no-load investors, whose frequent switching leads to a higher exposure to cash.

The resulting benefit to load-fund investors is significant. According to Dalbar, the average equity investor in load funds from 1984 to 1996 made 118.8 percent, in contrast to 113.9 percent for the average no-load fund investor.

In other words, despite the lesser performance of the average load fund, average load fund investors are making more money. As a result, they are probably not aware that they could have made even more by investing in no-loads -- if, of course, the absence of loads didn't tempt them into moving their money around.

But as is the case with most psychological hang-ups, consciousness is a big step toward change. When no one knew that the average load fund lagged behind the average no- load, investors had no motivation to find an alternative source of discipline. Now that we know, and given the magnitude of some funds' loads, investors have a powerful incentive to find a way to behave more like a load-fund investor while investing in a no- load fund."

EMERGENCY, EMERGENCY: (CDC) Americans logged 103 million visits to hospital emergency rooms in 1999, a 14% jump from the start of the decade. Stomach pain, chest pain and fever were the most common reasons for emergency-room visits. Adverse reactions to drugs and other complications from medical care accounted for 1.4 million visits in 1999, up 80% from 1992.

NURSING SHORTAGE: Spending on medical staffing is likely to increase more than 20 percent a year to $8.7 billion in 2001 and $10.6 billion next year. As more nurses reach retirement age the next 20 years, the shortage will worsen. Many firms that employ nurses are now eager to import foreign nurses to meet demand. But the nursing shortage is international.

It is one of the key reasons that I believe that long term care products will increase in price in subsequent years. Another reason not to opt for Medicaid since they cannot afford good care to begin with.

MORE VIATICAL PROBLEMS: On July 6, 2001, the Vermont Commissioner of Banking, Insurance, Securities, and Health Care Administration, Elizabeth R. Costle, ordered Florida-based Mutual Benefits Corporation (MBC) to cease and desist selling viatical settlements in Vermont.

FROM A READER: My in in laws are 72 and 73 years of age and in relatively good health. They have joint assets of approximately $800,000 and refuse to purchase good long term health care coverage. Their reasoning based upon analysis that a nursing home or similar care even at home would cost about $45,000 per year. Instead of paying huge premiums, each would rather risk paying $135,000 over three years and immediately liquidate the remainder of their asset. They believe that the look back period before going into Medicaid is three years. Can you advise?

Their reasoning is exceedingly flawed. First, no rational person with money would ever even remotely consider dying in a Medicaid ward. Next, the cost is roughly $50,000 now for institutional care and about 3 times more for 24 hours home health care. But their numbers are also flawed. Let's assume they don't need care till 10 more years. At 5% inflation, the $50,000 has grown to $81,000. Over 3 years equals roughly $240,000. Much more for extensive home health care. Next, they say they would liquidate their assets at the beginning of care. They wouldn't have the guts nor the foresight. They would wait a long time- probably two years- before they would divest themselves of assets. Then the three year rule starts from there. And who gets the money? What about their house?

Very poorly designed planning.

MANAGED CARE (NY Times) Two-thirds of health maintenance organizations no longer require approval from a health-plan nurse before a patient can be admitted to a hospital or see a specialist.

And this was interesting from one HMO- "Sixty percent of my costs over the next decade will be basically in a dozen to 18 chronic diseases,"

On average, employers are absorbing three-quarters of the increases in health costs this year; even so, workers are paying 7 percent more this year than last. However the overall cost for managed care is now rising in the double digits and has for several years. It will not change and, as a result, there will be higher costs to all employees.  

FOOLING AROUND: (WSJ) The Motley Fool has been taking in on the chin because their clever little "can't beat this" investing philosophy reversed itself. "Motley Fool's new direction (layoffs) symbolizes a broader decline of the very culture it spawned. People who made a fortune in the bull market by following each other like lemmings are realizing that it works in reverse in a bear market, and are now racing into index funds and to professionals.

This was part of their advice, "Pick the four most beaten-down stocks from the Dow Jones Industrial Average based on price and yield, and hold them for a year and a day, playing the likely turnaround. The Fool guide says the "Foolish Four" would likely repeat the 25% average returns it gained annually from 1973 to 1993."

But "Grant McQueen and Steven Thorley, professors of finance at Brigham Young University, in Provo, Utah, discredited the Foolish Four, in trade journal articles beginning in late 1999, as a statistical trick called data mining. After "back-testing" for 50 years, the Gardners found that the Foolish Four beat the Dow Jones Industrial Average by just 2% and abandoned it."

HIGH MINIMUM FEES FOR THE SUPER RICH: high- minimum funds should have an edge. Theoretically, funds catering to a small group of well-heeled investors have lower turnover, which in turn leads to better returns, An analyst noted that a fund "..has to put less money in cash to face possible redemptions especially in a bear market where redemptions tend to surge."

Nicholas-Applegate funds do not have loads, have high minimums and have tanked badly- an example that the rich end up in the same predicament as others. Part may be due to the high fees. Its Global Health fund has a total expense ratio of 1.41 percent. The average for the 28 no-load specialty health care funds is 1.32 percent.

I'm not a vegetarian because I love animals. I'm a vegetarian because I hate plants.

A. Whitney Brown

LTC (NY Times) Seventy percent of the 1,300 people, aged 37 to 55, polled last winter believed that they should be most responsible for taking care of their own long-term needs. Some 14 percent said the government should be most responsible, and less than 1 percent cited their children. Only 7 percent had long-term care insurance.

VA- (Very Awful) Four of every 10 claims for veterans' disability benefits are decided incorrectly, and a government training program designed to improve that record is two years behind schedule. Audits by the Department of Veterans Affairs found that 41% of the disability claims processed during 2000 were inaccurate.

Either I've been missing something or nothing has been going on.

Karen Elizabeth Gordon

ACTUALLY, I JUST LIKE THE PAIN OF THE SHOT: Epidemics of influenza typically occur during the winter months and are responsible for approximately 20,000 deaths per year in the United States. CDC guidelines recommend that those 65 years and older, those in nursing homes and other chronic care facilities, as well as adults and children with chronic disorders be immunized for the flu. In addition to its health benefit, immunizing seniors in Idaho produces a savings of approximately $1.3 million per year in influenza epidemic costs according to the Public Health Districts of Idaho.. 

A QUESTION: From a reader, "I will become the successor trustee of a moderately large family estate. Currently my widowed mom has been aligned for many years with a "non-fee" financial advisor in our state of Florida. I'm trying to educate myself very quickly in financial matters and this brings me to my question: I've heard many conflicting reports regarding the use of a non-fee financial planner as opposed to a "fee-only" financial planner. I've already communicated rather extensively with this current non-fee planner and I'm in the process of developing my own relationship with him (and his firm). Could you explain the pros and cons of working with such a planner. He's not in my immediate area (approximately 3 hours drive time from where I live) and I know there are many professionals of this nature in my home town. I will definitely need financial planning advice and instruction in the not-too-distant future and would like to know if I'm barking up the wrong tree, so to speak. Perhaps a fee-only planner in my own town would be the better way to go? Any direction in this regard would be greatly appreciated. Thank you in advance for your thoughts/suggestions."

My answer: You mother worked with a commissionable agent. Not necessarily bad but if they are a twit, nothing is gained and probably a whole lot of money has been lost.

So you can work with a fee only planner. Tends to be better in many cases and sometimes more knowledgeable about a subject matter (though not absolute). Further they are less inclined to offer something solely because there is a commission orientation. That said, most fee only aren't much better twits- and not necessarily very competent either.

Want an article that explains everything?- read Who Can You Trust (on my web site).

(You can also now also buy the video which will contain the most descriptive info on this subject  

Either way, I bet you won't use the planner she had (no sense in using one that far away unless they are the cream of the crop). And I am not being crass- but you don't know any professionals in the financial planning field since there are very, very, very few of them regardless of the area.

A stitch in time would have confused Einstein.

INSURANCE: LIMRA International's first quarter survey of individual life insurance sales shows a 4% increase in premium over the first quarter of last year, with a sharp decline (24%) in term sales and strong premium growth for Variable Universal Life (19%) and Universal Life (15%).

Only those who will risk going too far can possibly find out how far one can go.

T.S. Eliot

MUST BE UNTRUE: (USA Today, NASD) Stock brokers at Dean Witter Reynolds allegedly misrepresented risky bond investments to more than 100,000 consumers in a filing with the National Association of Securities Dealers. It contends that they sold more than $2 billion worth of "TCW/DW Term Trusts" (closed end bond funds) to customers between 1992 and 1993. About a quarter of money came from people over 70 years old, who were looking for conservative investments like federally insured certificates of deposits. The regulators said that the Term Trust investments were "replete with sales literature and instructions to brokers that totally miss it when it comes to disclosure about the potential volatility of these products." They indicated that Term Trusts were dependent on low interest rates to achieve their projected returns. And when interest rates rose in 1994, the Term Trusts lost over 30% of their value, and saw their dividends fall by nearly one-third.

"Nearly 30,000 customers sold at least part of their investments and lost $65 million. The complaint charges Dean Witter with violating the NASD's antifraud, suitability and supervisory rules."

Notice the word suitability. It is described in licensing training in that all sales must be suitable. However, there is no education as to what suitability means save for a determination of all "relevant" facts at the time of the investment. But brokers and insurance agents have never been taught the fundamentals of investing so how is it possible to take facts that they cannot decipher and then determine suitability that is not specifically defined?

The suit alleges the marketing material to its brokers was provided in a misleading fashion as a simple and safe investment that was suitable for virtually all investors as a safe, high quality alternative to CD's." The NASD says that the Dean Witter funds jacked up the returns with risky and volatile mortgage securities knows as inverse floaters whose prices would decline if interest rates rose. Does 1994 and 1995 ring a bell with anyone? The prospectus says that from 25% to 40% of the portfolio could be invested this way. They further noted that the funds "contained inverse floaters whose coupons declined  at multiples of between two to six times the rise in interest rate of their designated index." The funds were forced to reduce dividends by almost a third in 1995.

The NASD further notes that he marketing materials were misleading since they stressed the safety of the term trusts by repeating that the securities they contained would be government guaranteed AAA rated or of the highest credit quality. The firm also used high pressure sales efforts at the regional and branch office level, including the use of sales contest and sales quotas." Dean Witter received over $`119 million in underwriting fees.

Here's a good one to think about regarding suitability and these have been sold to  many elderly. Tell me how conservative GNMA's are and how they work? Bet almost everyone would get this wrong.

MORE HMO's: The U.S. Department of Labor has issued new rules to protect patients and regulate insurers and HMOs. The patients' rights claims procedure regulation, which is now being issued in final form, creates new patient protections intended to ensure that group health plan participants in managed care plans have access to a faster, more formal process for benefit determinations. The rules will apply to approximately 130 million individuals covered by private insurance, but do not go as far in defining patients' rights as the Norwood-Dingell bill (H.R. 2723) passed by the House last year. The rules will replace the existing 90-day deadline insurers have to issue a decision on whether to cover a treatment or service. Instead, insurers will have no more than 72 hours to rule on claims for "urgently needed care," 15 days to rule on medical procedures that need advance approval and 30 days to decide on reimbursement for care already delivered. If insurers deny coverage, patients have 180 days, instead of the current 60-day allowance, to file an appeal. Insurers must "consult with a health care professional who has appropriate training and experience" when deciding an appeal. The companies have 72 hours to determine an appeal on "urgent care," 30 days for claims seeking advance approval and 60 days for care that was already provided.  

SUCK UP THAT ENERGY: To power America's industries, homes and luxuries, the U.S. consumes more than 25 percent of the world's oil and coal, and more than 27 percent of its natural gas. Yet Americans make up barely 5 percent of the world's population.

MARRIAGE: 43 percent of all first marriages dissolve within 15 years; one in five lasts less than five years.

Another study, 60 years in the making and updated in the June issue of the American Journal of Psychiatry, has identified seven factors that appear to predict successful aging in men: moderate alcohol use, no smoking, a stable marriage, exercise, appropriate weight, positive coping mechanisms and no depressive illness.

EMPLOYEE STOCK PLANS (NY Times) In a 2000 study, Douglas Kruse and Joseph Blasi of Rutgers University found that average annual sales growth at companies with employee stock ownership plans was 2.4 percent higher than at companies with no plans. American Capital Strategies (news/quote)' Employee Ownership Index of companies with large worker holdings beat the overall market from 1992 to 2000.

Employees tend to pay about 15% less on the stock. But here is a dandy- a NEW tax.  The government decided in January that working people in these plans should be taxed on the difference between the discounted price at which they buy the shares and the prevailing market price. As of January 2003, workers and companies offering the plans will have to pay payroll tax, currently 7.65 percent, on the difference.

When I was a boy I was told that anybody could become President. Now I'm beginning to believe it.

Clarence Darrow

BAD NURSING HOMES: State inspections show that 1.6 million mursong home patients suffer from avoidable bedsores. If you have money and opt for public care, figure that you might be one of the unlucky ones simply because low pay per attendee means poor care per patient. If you have money, but a LTC policy and then use it to get a good facility.

THIS IS WHY THERE ARE MORE TAX CHEATS: The IRS said that decades of efforts to catch money launderers and other tax criminals using offshore accounts had not worked. A congressman indicated  that fewer than 6,000 of more than 1.1 million offshore accounts and businesses were properly disclosed and therefore legal. The United States loses $70 billion in taxes annually from such evasion -- "a figure so huge that if even half that amount were collected it would pay for a Medicare prescription drug program without raising anyone's taxes or cutting anyone's budget."

LOAD VERSUS NO LOAD: The world of no-load funds is getting smaller. Direct sales of mutual funds are 20% of all fund sales, down from 31% in 1990, according to Financial Research Corp. The Boston consulting firm expects such direct sales to drop to 18% by 2005.

As to loaded funds, the typical fund 15 years ago (A) was front end loaded at 8.5%- then dropping to about 5% for many. However, back end loads (B) commenced. Then there were C with 12(b)-1. Now the brokerage firms have D, F, I, J, M, N, P, R, T, Y and Z. I have seen prospectuses that have more pages covering the various load strategies then the do about the fund itself. Caveat Emptor.

OOOOOOOOOOHHHH, I'M IMPRESSED. Allstate will turn many of its 13,000 rank-and-file exclusive insurance agents into more holistic planners, rechristened with a new title: personal financial representatives. Bite me.

DEATH: (Journal of the American Medical Association)  Americans are shifting away from physician-assisted suicide as the answer to end-of-life problems, and towards care that eases pain and emotional suffering.

SAVING (NY Times) American savers hold $1 trillion in low-yielding savings accounts that average 2.1 percent interest, the survey found. Over 40 years, that amount would result in $2.3 trillion in savings. By contrast, the analysis found, the same amount invested for 40 years at 7.1 percent would yield $15.5 trillion -- more than 12 times the principal.

The prime purpose of eloquence is to keep other people from talking.

Louis Vermeil

INCENTIVE STOCK OPTION (ISO) definition (Robert Summers) A special stock option granted to employees as part of their compensation that has certain tax advantages. The employee odes not pay regular income tax until the stock is sold or transferred. However the spread at the time of exercise is a tax preference under the Alternative Minimum Tax. If the stock is sold more than two years after the ISO is granted and more than one year after the ISO is exercised, the employee receives preferential long term capital gains rates on the sale of the stock.

Non Qualified Stock: Stock given to employees, independent contractors or consultants as compensation. When a Non qualified option is exercised, the employee receives compensation equal to the spread at the time of exercise. The company receives a deduction for the compensation paid.

Spread: The difference between the strike price and the fair market value of the stock at the time of exercises.

Strike Price: The price of value as established in the option contract. For example, assume it was $3 per share. If the shares sold for a fair market value of $7 per share, the difference of $4 per share is the amount considered for taxation.

What has been missed in the stock option craze is the real life element of the company itself. A large AMT can really hurt, particularly if the stock should drop. I remember one conversation AFTER THE FACT where an employee had a HUGE tax to pay but the stock had fallen to next to nothing. Now he had no stock value and, according to him, a tax hit of over $1,000,000. Nothing I could say to make the situation better. He simply had an emotional attachment to his company and did not sell when it was plummeting. Life sucks sometimes- particularly if you are not paying attention.

The only sure sign a man is dead is that he is no longer capable of litigation.

SO YOU THINK THE STOCK MARKET IS LARGE: (NY Times) "Although most investors focus on the stock market, the corporate bond market dwarfs it in size. And the gap is widening. So far this year, companies have raised only $146 billion from new stock issues, compared with $935 billion in the corporate bond market, according to Thomson Financial Securities Data. The peak of corporate issuance came in 1998 when $1.2 trillion worth of bonds came to market, up from $433 billion raised in 1995."

Early morning cheerfulness can be extremely obnoxious.

William Feather

INTERNET SHOPPING: although 5.9 million Americans used the Internet to obtain automobile insurance quotes last year, only 650,000 actually bought a policy.

DEPRESSION: Depression is a common and debilitating condition, affecting up to 21.3% of women and 12.7% of men in the United States at some point in their lifetimes

HOW HIGH?: the S&P peaked at 21 times earnings in 1929. In 1965, in the other great cycle, the post-war cycle, it again peaked at 21 times earnings. Both cycles were built on incredibly strong earnings and productivity gains. In this cycle the index peaked at 33 times earnings, and as we sit here the S&P's P/E is at 26 times earnings. The long-term P/E average is 14.

COUGH: Smoking cigarettes for 20+ years can increase the risk of dying of colorectal cancer by 40%+, according to a study that blames tobacco use for nearly one in eight such deaths in the United States.