Moneydiet

AIG managers entitled to a Bonus?

What do you think, should the AIG managers get a bonus over 2008, while their company almost went bankrupt?

The bonus plan established for the financial products unit before the federal government stepped in called for $220 million in retention pay for 400 employees for 2008. About $55 million of that was paid in December and the remaining $165 million was paid on Friday.

The retention plan also calls for another $230 million in bonuses for 2009 that are due to be paid by March 2010. Combined with the 2008 bonuses, that would bring the total retention pay for financial products executives to $450 million.

So let me get this right... AIG makes a loss over 2008 of almost $100 billion, gets almost $170 billion in government money, and now pays out a bonus to employees to retain them.

“We cannot attract and retain the best and the brightest talent to lead and staff the A.I.G. businesses if employees believe their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury,”

In this economy, I doubt that those same employees will switch jobs, as there simply are not many jobs out there.

With AIG well below $1, the company has become a shadow of the once biggest insurance company.

Recession Survival Techniques

With the Dow Jones Industrial Index at a multi year low, forecasts of big companies like GM and AIG maybe going bankrupt and even Citigroup close to $1 per share, you start to wonder what you should prepare for if the Shit hits the fan completely!

What are the recession survival techniques? A couple of tips:

1. Pay off your debt as soon as possible. As long as you have to pay interest on the amount of money you owe, you cannot spend that same money on your monthly costs of food, shelter and other immediate needs.
2. Don't be sloppy at work. These are times you cannot afford to loose your job. As long as you keep bringing in that monthly pay check, you have money to pay the bills.
3. What are you eating? Make sure you stay healthy and well fed, but also don't spend the money on the gourmet food ingredients. You can scale down. Make yourself a big meal in the weekends, and freeze it for later days.
4. Use coupons on nonperishable foods. Coupons will give you a price advantage. If you stock up enough food, at least you'll have something to eat when you are really broke.
5. Take an extra job in the weekends!
6. Sell stuff right now on eBay. You sure have accumulated some stuff you don't really need. Now is the time to off load those unneeded products and still get a good price for it.

What are your tips for surviving the recession?

New York Times saved...for now.

Just on time, The New York Times seems to have found an angel. An angel to rescue the paper. The Mexican billionaire Carlos Slim is close to closing another multi-million dollar investment in The New York Times.

A couple of months now the press has been all over this story. With more than $1 billion in dept, less than $ million in cash, the Times is in trouble.

The Times is trying to secure enough cash to pay off debts. The company has a $400 million credit facility that expires in May, but it has said that it does not intend to renew that full amount. It also has $100 million in bonds due later in the year. A further $250 million will come due in 2010, and a $400 million credit facility expires in 2011. As of September, the company had about $46 million in cash; its total debt load is $1.1 billion.

But you can ask yourself, for how long will this money last? If Carlos Slim now is investing $250 million in the Times, when will the newspaper run out of cash again. Won't be long if the advertisement revenues go down even further.

The worst it gets in the economy, the more companies will safe on investing in marketing campaigns. And printed papers are already on the way down.

But then again, with more than $60 billion worth, for Carlos Slim is $250 million just play money. Like going to Vegas, he is essentially gambling on an uprise of the Times.

He explained his investment by saying: “It’s not what you think. What’s declining is the paper. Not the news. News, information, content — well, look at the success of Google. And I think The New York Times is doing a good job in the digital information area.”

We shall see...

The New York Times Company (NYSE: NYT) is a diversified media company, including newspapers, Internet businesses, television and radio stations, and investments in paper mills and other investments. During the year ended December 31, 2007, the Company operated in two segments: News Media Group and the About Group.

Ride The Next Oil Price Wave

With the oil price way down from its last summer peek of more than $145 per barrel, resulting in gas prices of over $4.50 per gallon in the US, there might be a great opportunity to invest in certain stock which were hit pretty bad.

One of those stocks is Frontline Ltd.

Frontline Ltd. (Frontline) is engaged primarily in the ownership and operation of oil tankers, including oil/bulk/ore (OBO) carriers. The Company operates tankers of two sizes: very large crude carriers (VLCCs), which are between 200,000 and 320,000 deadweight tons (dwt), and Suezmaxes, which are vessels between 120,000 and 170,000 dwt. As of February 29, 2008, the Company operated a tanker fleet consisting of 76 vessels. The fleet consists of 42 VLCCs, which are either owned or chartered in, 20 Suezmax tankers, which are either owned or chartered in, eight Suezmax OBOs, which are chartered in, and five VLCCs, and one Aframax tanker under its commercial management. In January 2008, the Company established Independent Tankers Corporation Limited (ITCL), as a wholly owned subsidiary for the purpose of holding, by way of contribution, its interests in Independent Tankers Corporation (ITC). In March 2008, Frontline spun off 20% of ITCL to its shareholders

Imagine what would happen when the price of crude oil goes up again in demand? Yep, the stuff needs to be transported over the whole world. This means prices and bookings of the tanker freight room will go up.

Frontline is not only interesting when it comes to the possible rise in the stock price, the stock now is down 50% from last years high of $71.24. With a stock price of $31.49, Frontline, symbol FRO, is attractive to invest in. Also the company is paying a quarterly dividend which is extremely high in the investment industry; 2008 dividend: $8.25.

This is a dividend rate of more than 25%!!!

Tax Money Spending on Bail Outs!

Is this for real? Bank of America acquires Merrill Lynch, now gets third capital injection of Tax money $45B in total.

Bank of America Corp. received its third capital injection from the U.S. government Friday, after the company posted a fourth-quarter loss of $1.79 billion and absorbed even greater losses from its takeover of Merrill Lynch.

This is just wrong in so many ways.

Bank of America Chief Executive Officer Ken Lewis said on a conference call with investors that his company realized soon after its decision to acquire Merrill in September that losses were accelerating beyond expectations. BofA considered abandoning the deal, but the government wouldn’t allow it.

So who is calling the shots here? It is my believe that the shareholders of Bank of America should have given the opportunity to vote on the acquisition. Now these shareholders are paying the price.

Merrill Lynch which has been taken over by Bank of America, today reported a record loss of $15.31bn for the fourth quarter, while Citigroup posted an $8.29bn loss.

Merrill's loss amounted to $9.62 a share, driven by big writedowns which were described by its new owner as "severe capital markets dislocations".

Even more to come, brace yourself!

State of the economy

Since a couple of months I finished to have a paper delivered at home. The New York Times went open for public online, and I was hardly reading the delivered bunch of papers.

Now, the same New York Times came with a great article of what I already would happen, consumers are changing their behavior based on a different wallet they have to their disposal.

In Ohio, Holly Levitsky is replacing the Lucky Charms cereal in her kitchen with Millville Marshmallows and Stars, a less expensive store brand. In New Hampshire, George Goulet is no longer booking hotel rooms at the Hilton, favoring the lower-cost Hampton Inn. And in Michigan, Jennifer Olden is buying Gain laundry detergent instead of the full-price Tide.

So if you have to save some money to save your budget, what would you think of to spend less on? A couple of free tips to get started:

• Spend less on coffee on the streets. A Starbucks Late is around $3 a pop. Getting rid of this habit will save you some serious money
• Eat at home, instead of going out to diner. Trust me, I love going out for diner, but making myself a good meal with the help of a cook book, is a great way to save money
• Stop home delivery of your newspaper. You can buy it whenever you feel the need to read the paper, but in all those other cases, just read the news online
• Go only one time per week to the supermarket. The less you are shopping, the less you buy stuff you don't need
• Always, but always make a shopping list at home, before you go to the supermarket. This will avoid unnecessary

There are so many free resources to learn to get your finances in order. Just start at The Simple Dollar, and just keep on reading...

Some other great sites are:

• Get Rich Slowly
• The Working Dollar
• Generation X Finance
• The Digerati Life

Financial sector is the ugliest girl in the room

Investing stock is always a tricky business, but who would have thought that the bears would hurt the financial sector as what happened the last couple of weeks.

Week after week there are news items of lay offs, big write offs on equity and even possible bankruptcy.

What's going on here, and how much value is whipped out? Boy am i happy I did not had any more in that sector...

Overall I've scaled down my exposure to the stock market, as uncertain times are here to stay for a little longer...

Earning $10/day while on the beach

Every man's dream. Spending time with the family on the beach in the Caribbean, while making money. If only live could be so easy!

I'm spending some time with the wife and kid on the Riviera Maya. I'm totally enjoying it. Off course writing is slow these days, as I'm spending most of my time at the beach. Writing at the beach is a no go for me...

The advantage of having a couple of websites still getting traffic, is that you still earn some money. In my case not yet very much, but in the coming weeks more to come.

But still, this month, which is almost ending, I made some decent extra pocket money. While spending my time on the beach, kite surfing or drinking a beer watching my daughter play in the sand, I made a little bid more than $10 per day... Now that's sweet...

One more week, and we are off back home, where I'll have another 2.5 weeks to play around. I intend to spend that time on my projects, which will bring more money in...

Good times are here to stay!

Quick win, Yahoo stock sold

It took me some time to report the profit, but after I had picked up the Yahoo stock for around $19, I was able to sell the position within a week with a +50% profit.

This was exactly what I had intended. I was planning to buy the Yahoo stock just for speculation for a take over. I truly think that the parts of Yahoo are more worth than the stock price was representing. It was just a matter of time that there would be somebody asking to buy them. This came actually faster than expected.

Wow, that was a rush... Why don't I get the chance to invest more time into the stock market. Here and there a good placed bet, or just good stock picking... Who knows.

Rest me to say, that after a couple of years working harder than the average worker, I'm off on my Sabbatical this Sunday. I hope this will give me the chance to think, and to launch a couple of new projects which will be sustainable.

We will see...

Technorati tags: Yahoo

Yahoo stock a steal...?

Technorati tags: Yahoo

Just picked up a small amount of Yahoo Stock at $19.06.

Now I will wait until the promising web company of yesteryear is getting stuff back on track.