Easier lending standards signal lower default rates in future. Banks will usually ease their lending standards only when an upturn in the economy is in sight and companies have greater prospects for profits. During an economic slowdown the net percentage of banks tightening their standards will rise. This could be observed in 1990/91, and then during 1998 with the Asian crisis and LTCM. The last period of tight lending standards was seen between August 2000 and November 2001 when the US economy went through a recession. Since then, with improving macroeconomic data, banks started to ease their lending standards and companies’ demand for loans started to increase at the same time. Ahigh correlation of 0.79 exists between the net percentage of creditors reporting tighter standards for Commercial and Industrial loans and high-yield spreads for the period May 1990–August 2003. For the period November 1991–August 2003 the correlation between high-yield spreads and the reported demand for Commercial and Industrial loans by large and medium-sized companies is at -0.84.

Technical analysts get hot streaks. Famous analysts appear on all the business TV shows. They attract a large following of believers. Their pronouncements often move markets. Then, after a series of bad calls, they are considered buffoons. They still appear on the TV shows but are abused by interviewers for their bad calls.

Investors who seek certainty are attracted to these investment gurus. The gurus sell expensive newsletters and give expensive seminars. Investors who cannot handle the unmanageability and powerlessness in stock investing are willing to pay guru fees. Besides fees, technical analysis usually requires much buying and selling that incurs commissions and spreads.

Usually, followers find the gurus at the height of their popularity. This is when they are receiving the most publicity and are near the end of their hot streak. New converts then plunge into the inevitable cold streak and lose large sums of money.Emotion cannot be avoided in investing. We are all attached to our money. When values soar, our egos soar. Huge losses plummet all of us into anxiety, depression, regrets, resentments, and free-floating fear. No investment system will ever take all the emotion out of investing. The trick is to find investments within your emotional comfort zone. If you find technical analysis fun, despite recurring losses, then it is in your comfort zone. If you find the losses depress you too much, technical analysis is not within your comfort zone.

Seeking to take emotion out of investing, stock analysts have invented many systems of technical analysis. Technical analysts look only at numbers.

Most believe a thorough study of stock price and volume patterns alone should allow the prediction of future prices. Some technical analysts study more factors than price and volume. All build elaborate charts and read them for clues to the future. Often, extensive computer modeling and game playing systems are employed. Economic factors, stockbroker pressure, the brother-in-law’s inside information, the CEO’s cold, and other factors are ignored.

Technical analysis is great for number people. You can play with endless formulas to analyze past trends hoping to predict the future. However, technical analysis is best employed on other people’s money. Then you can remain objective and emotionless. All the studies of technical analysis show that it is ineffective. Used on your own money, you are likely to have strong feelings as losses mount.

If you consistently get a tax refund every year, it means that you are having too much withheld from the paychecks that come into your household. While it’s always fun to have the government hand you a big check, it essentially means that you’ve loaned them some of your discretionary income, interest-free, for a year or more! If this is your situation, you need to talk to your accountant, financial planner, or employer about adjusting your withholding on your W-4. To calculate the correct number of exemptions to report on your W-4, visit the IRS website at www.IRS.gov and use their online withholding calculator.

Calculating discretionary income is simple. There’s no need to get out your protractor or call your friend with a Ph.D. in Economics. It’s a simple three-part formula that requires basic arithmetic. Once you burn this formula into your brain, you’ll begin to see every dollar that flows in and out of your household in a different light.

Discretionary income is calculated by taking your household total income and subtracting two kinds of expenses from it: fixed and variable expenses, which I’ll discuss in a moment.

On paper, it looks like this:
Total monthly income
– Fixed expenses
– Variable expenses
_______________________
= Discretionary income

That’s it!

The principal tax-related issue normally affecting the lenders in debt for equity swap transactions is the treatment of any loss suffered as a result of exchanging debt for shares which are likely to be worth considerably less than the debt’s face value. To maximise tax efficiency, such ‘loss’ should be available as a tax shelter at the time of the transaction. In certain jurisdictions, however, losses arising from such exchanges may not be recognised for tax purposes until the disposal of the shares.

To create a structure that will secure tax relief at the time of the debt for equity swap transaction, the following factors may need to be addressed:

The reorganisation must not be structured such that the company ‘repays’ the outstanding debt and the lenders use the notional proceeds of the repayment to subscribe for the company’s shares. Instead, the transaction needs to be an ‘exchange’ of debt for shares.

If a proportion of the shares allocated to lenders relates to rolled-up interest, a further advance may need to be made to the company to notionally repay the interest, with this new ‘debt’ then being exchanged for shares. The direct exchange of accrued interest for shares is often tax inefficient.

The tax efficiency of the transaction, both in the company’s and lenders’ interests, is a key consideration in structuring debt for equity swap transactions. Often considerable value can be released from the company’s accumulated losses by structuring the transaction effectively.

Research options to reduce the total amount repaidon yourstudent loan.
- Ask if your loan holder offers benefits for automatic payments debited directly from your checking or savings account.
- Consider making payments during your grace period (Stafford loan) or post-enrollment deferment period (Grad PLUS loan), which will save you interest expenses over the life of the loan.
- If possible, pay more than the required monthly payment. Any additional amount you pay will reduce your outstanding principal balance, resulting in earlier payoff and lower interest costs over the life of your loan.
- Get organized. Carefully read all of your student loan-related correspondence and create a “my student loan” file to hold statements, notices and other important loan documents.
- Keep a phone log. Take notes when talking to your loan holder, including the date of each conversation, the name of the customer service representative who assisted you and a brief description of the conversation.