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Wednesday, December 12, 2007

Some Holiday Cheer

I am not related to anyone in this group!  I swear.  I’ve only spent a few days in Indiana in my entire life and have never set foot on the Indiana University campus. But this performance is still great fun.  Enjoy!  “And you better not ... in a pear tree.”

Posted by twcarey on 12/12 at 01:06 PM
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Monday, December 10, 2007

Words of Wisdom from Mickie Siebert

While researching my 12/17/07 column, which will focus on how brokers protect your assets, I was sent the November issue of Mickie Siebert’s “Dollars and Sense” newsletter, which was mailed to all Siebert’s customers with their November statements.  She has a lot of experience dealing with the safety of the public’s money.  I cannot reproduce the entire newsletter, nor do I have room to quote her extensively in the upcoming column, but I thought the following was of great interest and is well worth reading. 

Account Protection

You can take comfort in knowing that, when you do business with Siebert, your account receives the highest level of coverage available in the brokerage industry - to the total net equity - with no limit for the amount of cash or securities.  And, unlike many other brokers, there is no “cap” on the aggregate amount of coverage for all of our customers’ assets.  Let me explain how this works.

There are different kinds of account protection that brokerage firms provide their clients to protect your account against insolvency of the brokerage or its clearing firm.  (There is no account coverage that will protect you against fluctuations in the market value of securities.)

All securities brokerage accounts, including your Siebert account, receive coverage from the Securities Investment Protection Corp. (SIPC) as primary protection for up to $500,000, including a limitation of $100,000 for cash.  SIPC coverage is required of all registered broker-dealers.  Since most “cash equivalent” money market mutual funds are considered securities under SIPC, investments in money market mutual funds held in a brokerage account are protected by SIPC along with your other securities to a maximum of $500,000.  You may visit http://www.sipc.org to learn more about SIPC protection.

Brokerage firms also have the option of providing “excess-SIPC” account protection for assets above these SIPC limitations through policies secured from private underwriters. 

Muriel Siebert clears on a fully disclosed basis through - and domiciles your accounts at - National Financial Services LLC (NFS), a Fidelity Investments company. We are the “introducing broker” and NFS is the clearing firm, which means that they clear youre trades and execute certain other activities.  You see their name along with ours on your monthly statements and confirmations.

NFS has arranged for additional protection for cash and covered securities to supplement its SIPC coverage.  This additional protection is provided under a surety bond issued by the Customer Asset Protection Company (CAPCO), a licensed Vermont insurer with an A+ financial strength rating from Standard and Poor’s.  NFS’ excess-SIPC protection covers total account net equity for all cash and securities in excess of the amounts covered by SIPC, for accounts of broker-dealers, like Siebert and Fidelity Brokerage Services LLC, which clear through NFS.  You may access a CAPCO brochure about “Total Net Equity Protection” at http://www.siebertnet.com/html/convenience___security.html.

NFS has stated to us that “there is no specific dollar limit to the protection that the CAPCO bond provides for any single customer account, nor is there an aggregate dollar limit applied to the total combined customer accounts of any one correspondent broker that clears through NFS.”

Many other brokerage firms do not provide the level of total net equity account protection you receive.  Many have excess-SIPC policies that are subject to aggregate limits on the total amount of customer assets that are covered, limits that are a fraction of total customer assets in their custody. 

--------------------------------------------

Before you open a brokerage account, or deposit additional assets that would take you over the basic SIPC coverage levels, be sure you are familiar—and comfortable—with the assurances that your broker is protecting your money. 

Posted by twcarey on 12/10 at 10:30 AM
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Saturday, December 08, 2007

Where to Find Bonds Online

BARRON’S READERS OBVIOUSLY HAVE NOTICED the stock market’s not looking so well of late: There’s been a surge in requests for details about online bond trading. The Electronic Investor is happy to oblige, although it’s not an easy topic.

It’s tricky because there’s such a huge variety of bonds but only a thin inventory in the secondary market. That means finding bonds and reliable pricing is tough. Brand-new corporate or government-agency bonds tend to be sold to big investors, so not many are available online. A call to your broker is usually required.

There are other avenues to pursue, however. You can pick up new Treasury and savings bonds commission-free by opening an account at the TreasuryDirect site (http://www.savingsbonds.gov); this site also offers very useful information about upcoming Treasury issues and auctions. You can buy and hold Treasury bills, notes, bonds, TIPS (Treasury Inflation-Protected Securities) and savings bonds there. Users designate the financial account for payments and withdrawals, free of any charges. The “Research Center” tab features data that you may find educational, albeit frightening, about the Federal debt.

Another great place for learning about the bond market and getting quotes on a variety of issues is the Securities Industry and Financial Markets Association’s (SIFMA) Investing in Bonds (http://www.investinginbonds.com). This site offers real-time pricing data for municipal bonds, plus timely information on conditions in the corporate bond market. You can also find data on mortgage-backed securities.

We also like Yahoo’s bond page (bonds.yahoo.com) for its collection of articles in the “Bonds Education” section, which will inform the new bond trader while offering added depth of information to those with more experience.

OptionsXpress (http://www.optionsxpress.com) plans to give its bond platform a serious upgrade around the first of the year. We got a sneak peek, and like it so far. Unlike the current bond-screening tool, which is provided by a third party, the new one looks more like the screeners developed in-house. Results are displayed in a matrix, with quick links to trading. It’s a major change, including additional liquidity, and is much welcome.

Fidelity (http://www.fidelity.com) cut its pricing for most types of secondary-bond trading at the beginning of November. Corporate bond commissions were reduced from $2 per bond to $1, for example. Fidelity’s Open Bond Market, originally launched in 2004, offers comprehensive tools and information on fixed-income securities. We like the Bond Compare and the Bond Ladder tools. Apparently, Fidelity customers appreciate the Open Bond Market as well; according to a press release, 80% of the firm’s retail bond trades now are made online, compared to just 30% before the introduction.

Most retail brokers say they don’t charge commissions on trades, but in reality they just bundle those charges into the price of the bond. Fidelity’s goal with Open Bond Market is to offer transparent pricing info, with simplified trading charges distinguished from bond prices, as well as integrated real-time trading data for municipal and corporate bonds.

We discussed the upgraded NYSE bond platform earlier this year ("Giving Bonds an Electronic Upgrade,” May 14); recent visits to the site (http://www.nyse.com/bonds) show that the exchange has been true to its word—adding more bonds every month. You’ll find 20-minute delayed price quotes as well as a look at the market for individual bonds.

The site contains listings of available bonds, and gives users the ability to search the inventory, based on criteria such as maturity date, coupon and industry sector. NYSE’s bond platform started out as a service for its listed firms, but has progressed to provide excellent information for the individual investor as well.

ONLINE BROKER NEWS: Former BrownCo customers who were assimilated into E*Trade (http://www.etrade.com) last year recently got some good news. E*Trade, which had told Brownies that their low rates ($5 for market orders of stocks) would be maintained for a limited time, has decided the rates will continue.

A Barron’s colleague who was a BrownCo client notes that the $5 commissions also apply to no-load mutual funds with transaction fees. Other online brokers might charge as much as $75 for that. And you get access to some great funds, like Fairholme (FAIRX).

OUR 13TH ANNUAL REVIEW
of online brokers is coming up. What’s most important to you these days as you consider opening—or moving additional money to—an online brokerage account? Let us know at electronicinvestor@yahoo.com .

Posted by twcarey on 12/08 at 08:00 AM
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