Lita Epstein
Florida - http://www.litaepstein.com

Lita Epstein, who earned her MBA from Emory University’s Goizueta Business School, enjoys helping people develop good financial, investing and tax planning skills. While getting her MBA, Lita worked as a teaching assistant for the financial accounting department and ran the accounting lab. After completing her MBA, she managed finances for a small non-profit organization and for the facilities management section of a large medical clinic. She’s written over 20 books including "Trading for Dummies," "Reading Financial Reports for Dummies" and "Complete Idiot’s Guide to Improving Your Credit Score."

Lita Epstein
Florida - http://www.litaepstein.com

Lita Epstein, who earned her MBA from Emory University’s Goizueta Business School, enjoys helping people develop good financial, investing and tax planning skills. While getting her MBA, Lita worked as a teaching assistant for the financial accounting department and ran the accounting lab. After completing her MBA, she managed finances for a small non-profit organization and for the facilities management section of a large medical clinic. She’s written over 20 books including "Trading for Dummies," "Reading Financial Reports for Dummies" and "Complete Idiot’s Guide to Improving Your Credit Score."

This post is part of our Big Company, Small Town series, featuring large companies and the small towns in which they are headquartered.

Publix Super Markets is the largest employee-owned supermarket chain in the U.S. with 936 stores in Florida, Georgia, South Carolina, Tennessee, and Alabama. You must be an employee of Publix to buy stock in the company. More than 30% of the stock is owned by employees, and more than 30 million shares are owned by members of the founding family -- Jenkins. Its chairman is a family member -- Charlie Jenkins, Jr.

Publix ranks number 11 on the Forbes list of largest private companies, and 107 on the Forbes 500 list. It employs more than 100,000 employees, with revenues over $23 billion.

Yes, if you haven't figured it out, the company was founded by a Jenkins -- George W. Jenkins, Jr., in Winter Haven, Florida, in 1930. In 1940, Jenkins built Florida's first supermarket by mortgaging an orange grove. Jenkins moved the headquarters for Publix to Lakeland, Florida, in 1951, and built its first distribution warehouse there. In 2005, Publix celebrated its 75th anniversary.

This post is part of our Big Company, Small Town series, featuring large companies and the small towns in which they are headquartered.

State Farm is the world's largest mutual property and casualty company, which means its owned by its policy holders. In 2007, State Farm Mutual Automobile Insurance Company paid $1.25 billion in dividends to its mutual auto insurance policy holders. (In the interest of full disclosure, I did get one of those checks.)

The corporate headquarters are based in Bloomington, Illinois, where State Farm was founded in 1922 by George J. Mecherle. He thought farmers were being charged too much for car insurance because they don't drive as much as city folk and didn't incur as many loses. Well, the insurance companies available at the time didn't agree with him, so he started his own car insurance company for farmers.

Today, State Farm has grown into the largest insurer of cars and homes in the United States, as well as the leading insurer of watercraft. State Farm is also a leader in insuring Canadian cars and homes. State Farm serves a total of 77 million auto, fire, life, and health policies in the U.S. and Canada with 67,000 employees and 17,000 agents. About half of its employees are involved in claims processing in one of its more than 390 claims offices.

This post is part of our Big Company, Small Town series, featuring large companies and the small towns in which they are headquartered.

You probably wouldn't think that the world's largest public corporation is located in a small town with a population of just 29,538 (based on the 2005 Census), but Wal-Mart Stores Inc. (NYSE: WMT) maintains its corporate headquarters in such a town -- Bentonville, Arkansas. Sam Walton opened his first store there in the mid-1940s -- Walton's Five and Dime -- on Main Street as a Ben Franklin franchise. Today that store is Wal-Mart's visitors' center where you can find thousands of company photographs and memorabilia.

Sam Walton's first Wal-Mart Discount City store opened in 1962 in Rogers, Arkansas, and within five years Walton had 24 stores in various towns in Arkansas. In 1968 he opened his first stores outside Arkansas, in Missouri and Oklahoma. Walton incorporated Wal-Mart Stores in 1969 and started selling shares over-the-counter in 1970. The company was first listed on the New York Stock Exchange in 1972. Today Wal-Mart has more than 6,700 stores worldwide and serves more than 176 million customers weekly.

FDIC Chairman Sheila Bair has been sounding alarm bells for more than a year about the hazards for banks as foreclosures increase. Now, her worst dreams may soon be reality. This morning, the FDIC released its year-end numbers and the number of "problem" institutions jumped to 76 at the end of 2007, up from 45 a year earlier -- a 69% increase. At the end of the third quarter that number was 65.

As a result, the FDIC is staffing up. The Wall Street Journal reported that the FDIC is looking to bring back 25 retirees from its division of resolutions and receiverships. At the height of the savings and loans crisis in 1993, there were 572 "problem" institutions, and back then the FDIC had more than three times the number of employees it has today. So the FDIC needs to hire some new folks who can quickly get up to speed in the process of dealing with bank failures. More than 90 duty locations are listed for R&R [Resolutions and Receiverships] Specialists, but the announcement specifically indicates that the FDIC plans to rehire 25 retirees. If you've got the experience the pay is great: $67,836 to $180,770.

Employees hired according to the job listing will "engage primarily in resolution and receivership activities of financial institutions. They will be responsible for gathering, compiling, researching and manipulating financial data to prepare a variety of financial documents, management reports and presentations." They must be able to "analyze financial statements, operating and project reports, cost data, managerial practices, capital and reserves, credit condition, loan file documentation, cash flows and other elements to determine the soundness of the assets held by an insured institution and determine the risks and value of the assets and liabilities." FDIC obviously wants to hire quickly. The job listing opened on 2/20/2008 and closes on 2/28/2008.

January foreclosure filings jumped 57% over last year's numbers and they were 8% higher than the December numbers, according to the Wall Street Journal this morning [subscription required]. There were 233,001 foreclosures filed in January, compared to 148,425 last January and 215,749 in December, the Journal reported based on RealtyTrac data.

Foreclosures are on an upward trend after a lull at the end of last year. This was expected as we're starting to see the next wave of interest rate resets on ARMs. California had the highest number of foreclosures in the nation with 57,158 filings, which is 120% higher than a year earlier and 7% higher than December. Other states that topped the foreclosure list include Florida, Texas, Ohio, Michigan, Georgia, Arizona, Massachusetts, Illinois and Colorado. The state with the highest foreclosure rate per household was Nevada.

Foreclosures are definitely taking their toll on the banking industry, as the FDIC gears up for possible bank failures. Don't expect any good news from the banking industry for a long time to come.

Lita Epstein has written more than 20 books including "The 250 Questions You Should Ask to Avoid Foreclosure."

You know the old adage for success in the stock market -- buy low and sell high. Well unfortunately too many Americans today are doing the exact opposite as they seek coverage from a very volatile stock market. They bought when this market was near the top and are now selling in panic.

I prefer to watch two men who clearly know how to buy low and sell high -- Warren Buffett (also known as the "Oracle of Omaha" and Bill Miller, a very successful fund manager at Legg Mason, who is known for his 15-year winning streak against the Standard & Poor's 500 stock index.

So are they selling or buying? Both are buying and buying big. According to Sunday's Washington Post, Buffett upped his stake in Kraft Foods (NYSE: KFT), Johnson & Johnson (NYSE: JNJ), U.S. Bancorp (NYSE: USB), and Wells Fargo (NYSE: WFC). He also took a new stake in GlaxoSmithKline (NYSE: GSK). Buffett disclosed that he owns 132 million shares in Kraft, which means he owns 8.6% in the maker of Ritz crackers, Philadelphia cream cheese, and Maxwell House coffee.

In a landmark decision that will help millions of workers who participate in 401(k) plans at work, the Supreme Court ruled yesterday that participants could sue 401(k) administrators if they believe the administrators of their 401(k) did not follow instructions and that lack of action resulted in loss of funds. More than 50 million workers invest their retirement savings through 401(k) funds and the total amount invested is $2.7 trillion. I'm glad the Supreme Court realized workers needed protection from administrators who don't follow instructions.

The case was brought by James LaRue of Southlake, Texas. His suit contends that he lost $150,000 in his 401(k) because the administrators of his plan did not move his holdings into safer investments as he instructed. The Supreme Court had to decide whether or not the Employee Retirement Income Security Act (ERISA) allows individual account holders to sue plan administrators for breaching their fiduciary duties. The law specifically allows recovery to the "plan" rather than the individual. Justice John Paul Stevens said in his opinion for the court, "Fiduciary misconduct need not threaten the solvency of the entire plan to reduce benefits below the amount that participants would otherwise receive."

The short-term drop in mortgage interest rates just before the emergency Fed rate cut in January of .075% and before its 0.5% cut at the regularly scheduled FOMC meeting at the end of January started a mortgage refinance party. But that party ended pretty quickly because mortgage interest rates are back on the raise. So it's not surprising that mortgage applications dropped like a stone by 22.6% to 822.8 last week. That level was last seen on Jan. 4 before the mortgage rate cutting party began in anticipation of the Fed rate cuts.

Many are sitting on the sidelines waiting to see if the Fed will cut another 0.5%, as analysts expect at its next meeting March 20 and 21. Since inflation appears to be heating up, that rate cut may not be a lock. Upward prices on food, energy and health continue to wield considerable inflationary pressures.

Since home sales continue at a snail's pace most new mortgage applications are for refinances, so these applications drop off dramatically as interest rates rise. Borrowing cost for 30-year fixed-rate mortgages were up about 0.37% from the previous week and averaged 6.09%, which was slightly below last year's level of 6.19%. Mortgage rates usually go up as the 10-year U.S. Treasury notes, which hit its highest yield on Tuesday at 3.915% since early January. Fixed 15-year mortgage rates averaged 5.55% up from 5.18% last week. Rates on one-year ARMs were unchanged at 5.72%. Now is definitely not the time to even think about an ARM. If you are taking a loan lock in that fixed rate.

If you haven't already gotten out of the market, it's too late. Why lock in losses? Too many people panic when they see the type of news we're seeing today about a worldwide stock market bloodbath. They get caught in the buy high, sell low trap, loose their shirt and stay out of the market until it looks safe. When will it likely look safe to these would-be investors? The next time the market is nearing its highs. Then they'll get caught in the buy high, sell low trap again. It's a vicious cycle for many uneducated investors.

For the savvy investors, tomorrow will likely be a buying opportunity. An opportunity to find the many jewels that will be out there. Companies will be beaten down, even though their fundamentals are strong, because they are caught up in the frenzy to get out at all costs. Do your homework today, review your watch lists and find what you think are the best bets and watch them tomorrow. If their stocks tank, buy them. Remember, all of us want to buy low and sell high in order to make money on the stock market.

Have we reached bottom? Probably not, but if you're waiting to find the bottom you'll likely miss out on the next big jump in the stock market. Few traders can actually hit bottom exactly at the right moment and when they do I suspect luck plays a big role in their picking right. You can read more about the failure of market timers in this excellent piece by James K. Glassman.

Good luck and good picking. Tomorrow may be a great day to find some good bargains.

Lita Epstein has written more than 20 books including "Trading for Dummies" and "Reading Financial Reports for Dummies."

As bad news mounts and fears grow about the impending recession, stock markets dropped around the world in Monday trading. Adding to the woes, analysts expect that the Bank of China may have to write off at least 25% of its $8 billion [subscription required] mortgage securities holdings in the U.S. Prior to these reports, the bank had only admitted to the need for a $322 million provision for losses, according to today's Wall Street Journal.

Europe's Dow Jones Stoxx 600 Index took its steepest fall since its Sept. 11, 2001 tumble, dropping 4.2%. Since it reached its 6 1/2 year high in June, the index has dropped 22%. A drop of more than 20% puts this market officially into bear territory.

Other key losers today include:

• France's CAC 40 lost 5.1%
  
• UK's FTSE 100 dropped 4%
• Germany's DAX went down 5.9%
• MSCI Asia Pacific Index lost 3.7% and the MCSI Emerging Markets Index fell 5.1%
• Hong Kong's Hang Seng Index gave up 5.5%
• Japan's Nikkei 225 Stock Average lost 5.1%

With this type of global bloodbath, expect U.S. stocks to tank when they reopen tomorrow. They are closed today for the holiday. Investors are seeking safe havens in bonds and currencies.

Lita Epstein has written more than 20 books including "Trading for Dummies."

In what could be a movie plot, the story starts with a meeting of Wall Street traders eating Chinese food on a cold February night in 2005. They met to figure out how they can turn the massive U.S. mortgage securities market into a cash cow for Wall Street, just like the $12 trillion corporate credit market. They had no idea at that time how the plot would develop into today's subprime meltdown that could actually set us on a bullet train heading toward the ultimate Wall Street disaster flick - the next Great Depression.

This could make for great movie entertainment if the story weren't true. Bloomberg first exposed the depths of this story in December 2007, but so far the rest of the U.S. financial press has pretty much ignored it. I wonder why. The only other newspaper that picked this up was the New Zealand Herald, but I did see discussions of the story on various other hedge fund blogs.

Bloomberg's primary source for the story was Greg Lippmann, one of the key players in the story, who was then a 36-year-old trader at Deutsche Bank. He was part of what Bloomberg calls the "Group of 5" that included Goldman Sachs (NYSE: GS) Trader Rajiv Kamilla (34-years-old) and Todd Kushman (32-years-old) of Bear Stearns (NYSE: BSC). Representatives unnamed in the story came from Citigroup (NYSE: C) and JP Morgan Chase (NYSE: JPM). Through a series of meetings that grew larger and larger, including ultimately almost all Wall Street banks, subprime mortgage securities were born. The International Swaps and Derivatives Association, which sets trading terms for dealers on these complicated financial vehicles, finally got involved to help draft what ultimately became the subprime mortgage securities contract. The inability to appropriately price these securities based on their high risk has already resulted in over $100 billion in write-downs by Wall Street banks and brokerage houses, as subprime foreclosures continue to mount.

Commercial real estate developers are no longer immune to the credit crunch hitting residential real estate owners and developers, according to today's Wall Street Journal. Yesterday in visible proof of the problem, a Las Vegas casino developer, Bruce Eichner, defaulted on a $750 million loan from Deutsche Bank because he was not able to refinance the debt. It's not the first time he's been caught up in a credit crunch. The Journal reports he lost several projects in New York City during its real estate downturn in the early 1990s.

The Journal also points out he's not the only one having trouble getting refinancing. Other commercial developers in trouble according to the Journal include:

• A major Australian shopping mall developer, one of the largest owners of shopping centers in the U.S., has been unable to refinance $3.4 billion in short-term debt.

• New York developer Harry Macklowe, who bought office buildings at the top of the commercial real estate market, can't refinance $7 billion in debt that's due in February. He's trying to sell his General Motors Building in midtown Manhattan to come up with cash.

Wow! I truthfully never thought I would see a story about lenders walking away from home equity loans [subscription required] rather than foreclosing on the home, but the Wall Street Journal reports that several banks are doing just that. Instead of foreclosing the home, mortgage companies which provided borrowers with equity lines or second mortgages on the property are walking away, writing off the loss and just leaving a lien on the property with the hope that some day in the future, when the house is sold or the owners want to refinance, they'll get their money.

Lenders that told the Journal they were writing off the loan rather than foreclosing include Bank of America (NYSE: BAC), Countrywide (NYSE: CFC) and Washington Mutual (NYSE: WM). Why would they just walk away? With home prices dropping, even if they did foreclose, they probably wouldn't get much or any money out of it anyway. Many of these homeowners owe more on the house than its worth. Only lenders with the first mortgage are likely to get any money by forcing a foreclosure.

Moody's estimates that losses on home-equity loans outstanding as of June 30, 2007 could ultimately total $58 billion on top of the $278 billion in losses on mortgages. "You can make a horrible decision by choosing to foreclose, " Steve Baily, a senior managing director with Countrywide, told the Journal.

When Ben Bernanke testifies before the House Budget Committee today, he's expected to announce his support for a short-term economic stimulus package, as long as it's based on measures that are quick and temporary, according to the New York Times this morning. He's told lawmakers he won't comment on proposals to link a stimulus package to the permanent extension of President Bush's tax cuts.

Finally some political sanity. I wish Alan Greenspan had taken that stance as President Bush continued to cut taxes during a war. If Greenspan had we wouldn't have added so much to U.S. debt and this country would be in much better shape fiscally to get us through the current credit storm.

Bernanke's support for the short-term fix is critical to getting many lawmakers to accept a stimulus package even if it means adding to the U.S. deficit. Without it, Congress probably could not pass a veto-proof economic stimulus package. President Bush would likely veto anything that doesn't include a permanent extension of his tax cuts to try to bully the Congress into continuing his economic folly - paying for a war on future debt. Our children certainly will hate us for a long time if we continue to ignore the burden we're putting on them.