2005's Top 10 ADRs

In a past posting we discussed how American Depository Receipts (ADR)
of foreign companies could be a good investment tool especially keeping
diversification in mind.

According to data from Morningstar Inc., the Top 10 percentage ADR
gainers in the first half of 2005 through June 27 (including only those
ADRs in the top 10% of volume leaders) are:
1. Internet Initiative Japan (IIJI)
2. Petroleo Brasileiro SA, Brazil (PBR)
3. Korea Electric Power, South Korea (KEP)
4. ABB Ltd, Switzerland (ABB)
5.Taiwan Semiconductor Manufacturing, Taiwan (TSM)
6. United Microelectronics, Taiwan(UMC)
7. Royal Dutch Petroleum, Sweden (RD)
8. America Movil SA, Mexico (AMX)
9. BP PLC, UK(BP)
10. Nokia Corp., Finland (NOK)

Large Cap Fund Standouts

Large Cap Value-based Funds: The data-base of Morningstar.com has
381 funds in this particular category. Their average size is $1.76 billion
with ten year returns at 9.4%, and 10.5% in 2004. The standout fund
in this category is Excelsior Value & Restructuring Fund (UMBIX) which
turned out to be a big winner with a 16.9% annual average return in the
past 10 years.

Large Cap Blend-type Funds: There are a total of 600 funds in this group
averaging $1.44 billion in assets. This category has returned 8.9%
annually in the past 10 years, and was up 8% in 2004. Mairs & Power
Growth Fund (MPGFX) took the highest honors with an annual average
of 16.9% in the past decade.

Large Cap Growth Funds: This group averaged 7.5% annual return over
the last 10-years returns and a weak 5.8% in 2004. The top performer
was Rydex OTC Fund (RYOCX) with a 10-year record averaging 13.76%.

Title Insurance & ...

In our June 10th posting we talked about two types of Title Insurance .
Today we discuss what you need to do for your Title Insurance if you are
refinancing your mortgage.

A new owner's title policy is not needed when the owner refinances a
mortgage. If you refinance your mortgage, the lender will require a new
lender's title policy even if you bought your house or condo or refinanced
your mortgage within the last few years. The reason is intervening liens
might have occurred, which will create a title risk for the lender when you
refinance. For example, maybe you forgot to pay the plumber who fixed
the pipes and he recorded a mechanics' lien against your title. Or perhaps
a creditor obtained a judgement against you, which was recorded as a lien
affecting your home.

If you got into a tax dispute with the IRS, there might be a recorded
federal income tax lien, which affects your home's title. If your home was
purchased or refinanced within the last few years, in most states when
you refinance your mortgage, you can obtain a substantial lender's title
insurance discount. But many title insurers "forget" to offer this discount
unless you remember to ask for it. If you purchased or refinanced your
home many years ago, you might not be entitled to a lender's title policy
discount. Yet it is better to ask.

Kids' Space

Many of us ignore the importance of teaching ideas and concepts of
personal finance to our kids but it is a crucial part of their development
and growing up as a responsible individual. If they cannot manage their
personal savings and planning for their future, just a good education may
land them on a good job but they may fail to utilize that advantage of
having a good job.

There is no hurry, of course. But you may slowly start
... probably as they enter Middle School.
The following websites may assist you in your endeavor:
www.KidsBank.com,
www.moonjar.com,
www.richkidsmartkid.com

Emerging Market Mutual Funds

Emerging Market Mutual Funds invest majority of fund's assets in the
financial markets of a developing country, typically a small market with a
short operating history. These funds offer higher potential returns in
exchange for greater risk. Here are some of the Mutual Funds which have
shown good performance recently by investing in Emerging Markets like
India, China, Brazil, Turkey, Russia, South Korea, Malaysia etc:

TWMIX: American Century Emerging Markets fund,
TEDMX: Templeton Developing Markets fund,
MAPTX: Matthews Pacific Tiger fund,
AMIEX: Armada International Equity fund,
TWMIX: American Century Emerging Markets fund,
MNEAX: Montgomery Emerging Asia Fund
GMCEX: GMO Evolving Countries III
You may also consider investing in Exchange Traded Funds from
[Click on their names to read our past postings]
BLDRS Family, Vanguard or Barclays Global Investors.

Mid Cap Fund Standouts

Mid Cap Value-based funds: The data-base of Morningstar.com has 114
funds in this particular category. These have $840 million in assets on
average. Their returns averaged 11.2% the past 10 years, and 15.6% in
2004. The top position among them is certainly taken by Muhlenkamp
Fund (MUHLX) with an 18% average annual return in last 10 years.

Mid Cap Blend-type funds: There are 174 funds of this type with an
average $590 million in assets. Their 10-year returns averaged 11.6%,
along with a return of 14% in 2004. This group is led by the Meridian
Value Fund (MVALX) which has averaged a whopping 19.3% annually for
the past 10 years.

Mid Cap Growth funds: This group in Morningstar's list returned averaged
8.3% in the 10 years, and 10.5% in 2004. The honor for best permoance
in last decade goes to Fidelity Mid-Cap Stock (FMCSX) , with 12.5%
average annual returns.

Solo or Individual 401(k)

If you are self-employed and donot foresee hiring employees in future for
your small business, the Solo or Individual version of 401(k) retirement
plan may be just right for you.

Recently, a growing number of financial Services firms have started
offering individual 401(k) plans, boasting many of the same features as
their corporate counterpart. And it has truely become quite popular. Just
like the corporate 401(k) or SEP-IRAs (discussed yesterday) designed for
the self-employed, Solo 401(k)s also allow you to invest a part of your
income on a pre-tax basis - and the contributions grow tax deferred. But
unlike SEP, one can borrow against one's account and also the contribution
limits are a lot higher.

In 2005 one can save (100% of the first $14000 of their income +
additional 25% of total compensation). With SEP one can contribute only
upto 25% of total compensation. For both SEP and Solo 401(k) plans, the
maximum contribution limit is $42000 in 2005 or $46000 if one is 50 or
older. However, if you are planning to expand your business by hiring
emplyees, the individual 401(k) is not a right plan for you. In that case
you will have to convert to the more complicated employer's 401(k).

Also, remember that, even though the law allows you to take loan upto
50% of your individual 401(k), upto a limit of $50,000, not every provider
offers such an option. So, be careful in selecting a right provider for you.
Also, do not forget to compare set-up fee, annual fee and other charges of
different providers.

SEP-IRA for Small Business

SEP stands for Simplified Employee Pension. This is a special type of IRA
plan that allows an employer to make contributions toward his or her own
(if self-employed) or employees' retirement. The SEP essentially functions
as a low-cost pension plan for small businesses.

The SEP-IRA enrollment process is also very simple. It's a 2-page
application process. The employer needs to complete Form 5305-SEP. The
employee completes the IRA investment application usually supplied by a
mutual fund company or some other financial institution which will hold
and manage the funds. The best part is: nothing needs to be filed with the
IRS to establish the SEP-IRA or subsequently. Unlike many other
retirement plans SEP does not require IRS annual returns. Any investment
earnings grow tax-deferred until withdrawn.

Some other facts about SEP-IRA: Employers can contribute a maximum of
25% of an employee's eligible compensation or $42,000 (for 2005 Tax
year), whichever is less. Employees are able to exclude from current
income the entire SEP contribution. The money contributed to a SEP-IRA
belongs to the employee immediately and always. If the employee leaves
the company, all contributions also leave with the employee.

Home-Based Small Business

If you are getting bored with 8-to-5 jobs and are planning to be at home
and starting some business, you need some capital but more importantly
some knowledge, some advice and some exposure to the issues related to
how people before you could walk that path. Here we present some
websites that you may find helpful to orient you mind toward that effort:

Score.org : Provides counsel from real business veterans on writing a plan
and launching a business. This site is managed by the Small Business
Administration's Service Corps of Retired Executives (SCORE).

WorkingSolo.com : Tips and advices for those who want to start working
for themselves.

RileyGuide.com : If you are switching jobs, this site presents lot of useful
links for work-related resources

Wahm.com & SlowLane.com : Parents who are planning the transition
from a regular job to working or staying at home may benefit a lot from
advices provided at these sites.

Retirement Benefits

Today we post some contact addresses and resources related to
retirement benefits. Obviously, our first stop should be the
Social Security Administration (800) 772-1213
which has 1,300 offices across the nation and might be the fastest route to
your question or to order printed material related to your retirement.

National Organization of Social Security Claimants’ Representatives
(800) 431-2804 is a referral service directing callers to attorneys who
handle Social Security Cases.

For an explanation of your rights under federal law you may visit
Pension and Welfare Benefits Administration, Department of labor,
(202) 219-8840.

Pension Benefits Guaranty Corporation (PBGC) (202) 326-4040
answers questions and offers advice on pensions.

Pensionrights.org (202) 296-3778 is a legal referral service for pension
related problems.

Small Cap Fund Standouts

Small Value-based Funds: There are about 125 funds of this type with
$660 million in net assets on average. Their returns averaged 13.2% over
the past 10 years, rising about 17% in 2004. One of the leading names in
this category is Heartland Value Fund (HRTVX) which averaged 14.7%
annually in last 10 years.

Small Blend-type Funds: There are 191 small-cap blends with an average
size of $860 million in Morningstar's database. They've averaged 11.4%
return in the past 10 years, returning 16% return in 2004. Among them
the Weitz Hickory Fund (WEHIX) was the standout, averaging 15.9%
annual gains for the past decade.

Small Growth Funds: There are about 280 funds in this category with an
average of $470 million in net assets. Their returns averaged 8.9%
annually in the past decade and were up 10.4% in 2004. The lead among
this pack is taken by the Henlopen Fund (HENLX) which has a solid return
of (10-year average) 14.7%.

Debt by Americans Up 10%

In the first quarter of 2005, the Federal government debt rose 13.8%, its
fastest quarterly pace in two years. U.S. mortgage debt rose 10.5% in the
first quarter and business debt rose 7.5%. At the end of the 1st quarter,
federal debt held by the public was slightly more than $4.5 trillion. The
value of real estate increased by $395 billion, a slight drop from the 4th
quarter's increase of $397 billion.

In the same period, the amount of new debt taken on by Americans rose
10% to $24.8 trillion, according to the Federal Reserve. It was the fastest
growth since the second quarter of 2003. Household net worth increased
0.7% to $48.8 trillion in the first quarter. Net worth increased to 545% of
disposable income, while owner's equity in real estate rose slightly to
56.3% of market value.

However, the net worth of households' equities fell by $122 billion, and
mutual funds' value declined by $21 billion, the Fed said. The value of
pension fund reserves also dropped by $237 billion.

Increase in debt, fall in households' equity, dropping pension fund together
with looming dangers of a burst in housing bubble and possible rise in oil
price in summer could call for trouble in stock market. This calls for a
cautious outlook (even if we are optimistic for long-term) in next few
months.

Dollar hits 9-month high

The dollar reached a nine-month high against the euro on Monday. Here
are the causes that are

On Friday April trade gap figure -- the difference between imports and
exports -- came in line of the expectation of Wall Street economists and
was viewed as confirming the economy's strength. The trade deficit in
April widened 6.3% to $57.0 billion, the largest increase since last October.
So far in 2005, the trade deficit is up 12.6% from the pace a year ago. The
U.S. trade gap was a record $617.58 billion in 2004.

The dollar also benefited from hopes for more U.S. rate increases and a
hint from a European Central Bank official that the ECB could cut its rates.
The dollar also rose 0.7% to 109.50 yen, near its strongest standing in 8
months.

The dollar has been rising at the euro's expense in recent sessions.
Rejections of the proposed E.U. constitution by French and Dutch voters
raised questions about the pace of market reforms and the integration of
member states. Recent soft data in a number of E.U. states also pressured
the euro. The euro's losses were also compounded by market rumors that
the E.U. could break up and opportunists are seizing a chance to dump the
euro.

Refinancing peaks up

The sustained drop in mortgage rates, in the face of the Federal Reserve's
tightening of short-term rates, has surprised many economists including
Mr. Greenspan. The May employment report came in at less than half of
what was expected last month, which pushed bond yields -- and mortgage
rates -- down further.

The fall in mortgage rates has prompted many homeowners to refinance
yet again. The Mortgage Bankers Association said this week that the
refinancing share of mortgage-application activity hit nearly 43% in the
week ended June 3. This is its best level in three months. The decline in
fixed rates also has also reduced demands for adjustable-rate loans. The
ARM share of activity decreased to 31.7% of total applications from
33.3% the previous week.

The low-interest-rate environment has also prompted revisions to home
sales forecasts for 2005. The National Association of Realtors this week
revised its outlook upward, saying home sales will hit records again this
year, with new-homes sales up 3.2% to 1.24 million units and existing
home sales climbing 1.6% to 6.89 million. Previously the Realtors' group,
had predicted that home sales would slip 2% to 3% this year, based on
forecasts for rising interest rates.

Fixed Rate: The mortgage agency Freddie Mae found that the national
average interest rate on the benchmark 30-year fixed-rate mortgage fell
to 5.56% in the week ending Thursday. In its weekly rate survey, the
agency also found the average for the 15-year fixed-rate loan fell to
5.14% from 5.2% the week earlier. The 30-year loan required the
payment of an average 0.6 point to achieve the rate; the 15-year needed
0.5 point.
[Note: A point is 1% of the loan amount, charged as prepaid interest].

Adjustable Rate Mortgage (ARM): Five-year Treasury-indexed
hybrid adjustable-rate loans averaged 5.01%, down from 5.07%.
One-year Treasury-indexed ARMs fell to 4.21% from 4.26%. The hybrid
needed 0.5 point and the ARM 0.7 point on average.

'Title Insurance' for Home

"Title Insurance" is a topic hardly any homeowner or potential buyer is
aware of, even though they pay or are bound to pay the cost for it. Most
property owners think title insurance is just one of those expensive closing
costs and nothing really ever comes back from it. Some people do not
even know 'What does it insure for'.

There are two types of title insurance policies:
(A) Lender's Title Insurance: Almost every institutional mortgage lender
needs lender's title insurance policy. The buyer (and occasionally the
home seller) usually pays for this policy. A lender's title insurance policy
protects the lender against title losses due to forged signatures (the
biggest cause of title insurance losses), recording mistakes, errors in deed
indexing, unpaid property taxes and other recorded liens, improper
foreclosures, title search mistakes, undisclosed easements and title claims
by heirs and ex-spouses. So, it protects the lender not the homeowner.

(B) Homeowner's Title Insurance: The homeowner's equity up to the policy
limit of the purchase price for can be insured by an extra one-time
premium. This insures homeowners and the owner's heirs from loss of
equity against most of the common causes of title losses as described
above. At the time of home purchase, this equity (basically your
down-payment) may not be much. However, as time passes by, mortgage
balance is paid down and the homeowner's title protection grows as the
lender's title coverage reduces.

You may not find anyone you know who got something back from this
insurance. According to a report from The American Land Title Association
in Washington, D.C., the title insurance companies pay less than 10% of
title insurance premiums collected for title claims, which is no doubt a
shockingly low pay back. The reason they provide is that the insurers
spend most of the premiums on background research on the title before
issuing policies. However, there is no doubt that some serious cases of title
losses cannot be prevented and that is why this insurance is a necessity.
For example, "Forging signature by collaborating with some corrupt
notary public by some close relative or partner to sell a house without
letting the owner know" is not an uncommon case. In such cases, the title
insurer must pay the forgery loss claim.

Financial Planning Resources

Today we post contact information and pointer to websites of some useful
organizations whom you may approach as individual or as a team to get
advice and guidance for financial planning:

For information on a variety of money-related topics
American Institute of Certified Public Accountants (800) 862-4272
The Financial Planning Association (800) 282-7526
International Association of Registered Financial Planners
(800) 749-7947

Especially for guidance needed to start an investment club, visit
National Association of Investors Corporation (810) 583-6242

For information from and about fee-only financial planners, contact
National Association of Personal Financial Advisors (NAPFA)
(800)366-2732

Emerging Market Bond

U.S. government bonds are safer in USA. Similarly, the safest thing one
can own in a country like Brazil is Brazilian government bonds.

More than $3 billion has poured into emerging-market bond funds
year-to-date. Upgrades from ratings agencies on emerging-market debt
and reform efforts by individual countries have proven a draw for the
interest of a large section of investors in recent times. Among those who
dared to take a risk with emerging-market debt funds have averaged
double-digit annualized returns over the past six years, according to
investment research firm Morningstar Inc. Although these funds are
returning just 3.5% on average this year through May 31, that's still better
than most U.S. and international bond and stock funds.

Some of the most widely held emerging-market debt can be found in J.P.
Morgan's Emerging Market Bond Index Plus (EMBI+), which tracks total
returns for traded external debt instruments in 18 of the more-liquid
emerging markets. The biggest country debt weightings in the EMBI+
are: Brazil at 22.9%, Mexico, 19.6%, Russia, 17.8%, Turkey, 8.7%, and
Venezuela, 6.5%. Brazil figures prominently in many funds with exposure
to emerging market because it's one of the most liquid markets. The basic
Brazilian debt instrument is the Brady bond, a roughly 10-year note.

The Boston based EmergingPortfolio.com Fund Research (EPFR) is a
leading provider of fund data, research and consulting. EPFR tracks 8,000
international, emerging markets and US funds with more than $4 trillion
in assets, including offshore and US-registered funds.

Other Than Credit Report

In one of our recent postings , we discussed how increasing numbers of
companies are requesting credit reports to assist them in the job hiring
process.

On the other hand, information like having the same job or address for
a few years - can make you appear to be more stable in lenders' eyes.
While this information is not used in creating your credit score, it is used
by lenders in addition to credit scores to make lending decisions.

Similarly, having checking and savings accounts also establish you as part
of the financial mainstream. If you have a good egg-nest in your
retirement accounts like 401k or 403b or Roth IRA, that really helps in
establishing you as a person of solid financial background, who works with
a plan. Banks wish to see such a reliable person to rent their money.

Mortgage Rates Move Down

On last Thursday the mortgage finance firm Freddie Mac stated that the
long-term mortgage rates fell last week for the 9th week out of the last 10.

Fixed-Rate Loan:
The rate on 30-year, fixed-rate loans averaged 5.62% last week, with an
average 0.6 point payable upfront, down from last week's average of
5.65% (A year ago, the 30-year fixed-rate loan averaged 6.28%).
According to the mortgage finance firm's survey, the average for the
15-year mortgage also edged lower to 5.20% last week from 5.21% the
previous week, with an average 0.6 point payable upfront (The 15-year
loan averaged 5.63% this time last year).

Adjustable Rate Mortgages (ARM):
The 5-year ARM inched higher to an average 5.10% last week, with an
average 0.5 point payable up front. This is up from last week's average of
5.07%. The 1-year ARM also rose to average 4.26% this week, with an
average 0.6 point payable up front, up from the previous week when it
averaged 4.21% (At this time last year, the 1-year adjustable-rate loan
averaged 3.98%).

Freddie Mac said that the improvements in the job market and rising
wages would likely put upward pressure on mortgage rates in coming
months but the same growth in income will partially offset any rise in
rates, enabling housing industry to continue its healthy progress. So, it
expects May home sales to remain strong, given last month's low rates.

CD Investment: June'05

It is the same story that is going on for a year or so. The short-term yields
continued to benefit from hikes in Federal Reserve's rate, whereas the
longer term yields remained as sluggish as cow by the economy's trouble
spots. With more possible rate hikes in line, it is a wise policy not to lock in
your cash in long-term CDs.

Short-term CDs, especially with 6-month maturities seem to be the best
opportunity to take advantage of rising yields. If you donot even want to
lock in your money, you may still enjoy a good 3.25% APY by putting it in
NY-based bank Emigrant-Direct by simply opening a savings account. No
minimum deposit is necessary. The Ing-direct bank also offers similar
account but with 3.00% APY. On the other hand, they give you $25 as
bonus just for opening a new account.

If you will still consider a 1-year CD, the 'Raise Your Rate' CD offered by
IndyMac Bank could be a good choice. You need to put minimum $5000
and the yield is 3.85 APY. Advantage is: They allow One-time rate
increase feature which may be exercised by you at any time during the
term whenever you feel it is prudent to do so. The entire balance will begin
earning the higher rate (available at that time) from the day following your
request. The original maturity date will remain unchanged.

Long & Short term Interest

The relentless raising of short-term interest rates by Greenspan & Co.
could not make the long-term rate to rise. The long-term rate remained
to be as sluggish as sea cows by the economy's trouble spots. The gap
between the two rates has reduced to nearly nothing. When this difference
was very wide (in years 2001-04), mortgage banks raked in profits by
borrowing at super-low short-term rates and then lending at high long
term rates to potential home-buyers.

When this spread started narrowing over the last 8 hikes in interest rates
by Fed, their margins started getting pinched. Now they have less
incentive to lend. Also, they have now much less extra cash to cover
defaults. As a result the mortgage banks have started scrutinizing new
borrowers more carefully.

This could be a potential problem for first-time home buyers. On the
other hand, less number of available loans could mean less number of
buyers especially in hot home markets. Who knows? That could turn out
to be one of the possible factors that can finally put a rush on rising home
prices ... to some extent at least!

The Battered Stock: AIG

In general, financial services funds have plummeted this year on concern
about higher interest rates and regulatory investigations that have hit
some of the sector's largest companies. The Financial Select SPDR ETF
(XLF) lost more than 3.6% this year.

This ETF and many other financial sector funds counts on the battered
insurer American International Group, Inc. (AIG) as one of their largest
holdings. As you are aware, AIG is undergoing intense regulatory scrutiny
and management changes. AIG filed its long-awaited 2004 annual report
with the Securities and Exchange Commission on Tuesday, restating
financial results for the past five years. As part of the restatement, AIG
cut shareholders' equity at Dec. 31, 2004 by $2.26 billion, or 2.7%, to
$80.61 billion, less than the $2.7 billion reduction the company had
projected earlier. This included an after-tax reduction of $1.19 billion for
changes in estimates for the fourth quarter of 2004. Revised calculations
lowered AIG's profits by nearly $4 billion for the five years since 2000.

Yet, over the last many weeks, many analysists and especially contrarions
are expressing a strong argument in favor of AIG regaining its footing in
reasonable time-scale. They think that there is a lot of bad news already
priced into the stock and that it's trading below what it's worth.

For example, Morningstar quotes $80 a share as a fair value estimate for
AIG, whereas the stock closed Tuesday at $55.55 - representing a Price
to Earning Ratio 13.4 - with a dividend yield of 0.90%.