isco perform more like resilient Nifty Fifty stocks, which collapsed in the '70s but rebounded to deliver tremendous rewards in the '80s and '90s?

If you buy the more optimistic picture -- namely, that Cisco's current woes only reflect a momentary overstuffing of its product pipeline -- then we might expect its earnings per share to increase again in the near future. With a stock price around $18, Cisco could represent a tremendous value.

It's like the stockbroker who was once asked when would be a good time to buy Microsoft. He responded, "The stock market is open about 210 days of the year, and any one of those days is a good time to buy Microsoft." The authors of "Dow 36,000" would say the same for Cisco.

During times of pervasive market gloom, it's heartening to read books that claim that the stock market is underpriced (Harry Dent's "Roaring 2000's" books are good examples of this genre). Be aware, however, that the rationale underlying these books can be a little suspect, because sooner or later there's a message that you should consider working closely with a broker or advisor. As the author of two books on 401(k) investing, I've had a little exposure to the bookselling business. Appealing to the investment community is a big part of that selling challenge. If your book talks about how great the stock market and stockbrokers can be, then you receive paid invitations to speak to large groups of investors, who, in turn, buy your book.

Even with that caveat, I'd recommend "Dow 36,000." Any investment book that doesn't put us to sleep will improve our comprehension of how different investments can serve our needs. This book's underlying premise is that a buy-and-hold strategy is the best answer to attaining a long-term financial goal. That's a sensible and praiseworthy idea, especially for retirement investors who are building a 401(k) or IRA over many years.

BUYandHOLD does not offer or provide any investment advice or opinion regarding the nature, potential, value, suitability or profitability of any particular security, portfolio of securities, transaction or investment strategy. Any investment decisions you make will be based solely on your evaluation of your financial circumstances, investment objectives, risk tolerance, and liquidity needs. The securities mentioned above are being used for illustrative purposes only and should not be regarded as an offer to sell or as a solicitation of an offer to buy and past performance is no guarantee of future results.

Copyright © 1999 – 2012 Freedom Investments. All Rights Reserved.
Freedom Investments, Inc. Member FINRA/SIPC
Privacy & Security

e="Arial,Helvetica,sans-serif" size="2">If a parent (or grandparent) is stepping up to the plate to pay the premium, we shouldn't overlook the opportunity for some tough love. Get a signature on an open-ended note for an amount equal to whatever the future premiums might total. In ten years, when your child's stock options are exercised in a dot com that finally makes it, you can get all your money back plus interest.

When you decide to cut the cord will depend on circumstances. It reminds me of Royal Little, the late founder of Textron, who, at age 95 was giving a speech in San Francisco. He said, "I'm no longer active in the management of Textron. My boys run the company now, (pause) but after all, my boys are in their early seventies."

In the meantime, check out a web site called ehealthinsurance.com for quotes and benefit comparisons. It will offer some solutions to a potential problem you never thought you had until now.

Copyright © 1999 – 2012 Freedom Investments. All Rights Reserved.
Freedom Investments, Inc. Member FINRA/SIPC
Privacy & Security

ns. However, beginning in '02, they will have the same borrowing privileges as all other participants. The flexibility offered by the borrowing provision (a contribution with a string attached) allows some to make larger contributions than they could otherwise afford.

9. Defined benefit plans that fund for a specific retirement benefit have been vastly improved for those wanting to dramatically increase a retirement nest egg in a short time. For owners of smaller companies nearing retirement age, these plans now offer the opportunity to contribute well in excess of $100,000 per year. They are ideal tools for older owners or key managers of smaller companies.

10. When it comes to IRA's, today's $2,000 annual limit will steadily increase to $3,000 for '02,'03 and '04. Then it will be $4,000 for '05, '06 and '07. It will bump to $5,000 by '08.

11. "Bonus" IRA contributions for people over 50 will be $500 in '02, '03, '04 and '05. These contributions will bump to $1,000 in '06.

12. IRA contributions will only be deductible for people who are not offered a retirement plan by their employer OR whose incomes fall below $25,000 if single and $40,000 if married.

13. Many of these relaxed limitations also pertain to 403(b) plans (for non-profit organizations), 457 plans (for government employees) and so-called SIMPLE plans or SIMPLE 401(k)'s (offered by a limited number of small companies.) There are differences among these plans, however, so your employer should ask for a list of changes comparable to the categories listed here.

What are the bigger implications of this grab bag of changes? For one thing, it now makes economic sense to take a second job or send a spouse back to work. An extra $40,000 per year socked away in a retirement plan earning 10% will accumulate to over $1,000,000 in just 13 years. That's one million dollars!

Furthermore, the tax deductible treatment of the $40,000 means that it only costs about $25,000-$30,000 of what would have been the additional after-tax take-home pay. This giant "government subsidy" could fill the hole left in our retirement plans by recent stock market declines. It is the closest most of us will come to having a numbered Swiss bank account.

Basically, the new laws leave you with no excuse for not saving adequately for retirement. All too often, the government has approached pension legislation with a misguided mindset, but this time they have done something right.

These new laws allow us to save aggressively, and almost half of what we deposit is money that would otherwise have disappeared in taxes. When I first read these new provisions, I thought I was in some offshore tax haven. Let's enjoy it while it lasts.

Copyright © 1999 – 2012 Freedom Investments. All Rights Reserved.
Freedom Investments, Inc. Member FINRA/SIPC
Privacy & Security

width="5">

borate performance reports.

The best way to get started is to ask an older relative, friend, or your CPA if they have some referrals. CPA s are good referral sources because, by background and temperament, they are conservative. How many wild and crazy CPAs do you know? According to one study, CPAs have the highest IQs of any professional group. The last thing they ever want to experience is being tarred by the same brush as that of an advisor whose clients have had any reason to complain.

In the end, whether working with a financial planner or an employee of a major institution, the quality of the relationship you have with that person will determine the level of success you experience over the coming years. If you sense that your advisor is offering advice they would give to themselves were they in your situation, then you are dealing with a true professional. The older we get, the more we depend on our intuition to tell us who to trust.

So, take your time if you're looking for help. Do some research and talk to a number of people. In these whipsawing markets, there's certainly no hurry. Nobody has the clairvoyance to know what will be happening in the immediate future. As J.P. Morgan said when asked, "The markets will fluctuate."

In the NBA finals, Kobe Bryant and Alan Iverson got into a little spat at the end of game five. Asked about it later, Bryant said, "It's nothing. It's just basketball." The same can be said for all the factions competing loudly for your investments. "It's just business." Choosing an advisor and financial institution, in the end, is a personal decision that's a little like choosing shampoos. Find one you are comfortable with, apply some common sense, and be reasonable with your expectations.

BUYandHOLD does not offer or provide any investment advice or opinion regarding the nature, potential, value, suitability or profitability of any particular security, portfolio of securities, transaction or investment strategy. The securities mentioned above are being used for illustrative purposes only and should not be regarded as an offer to sell or as a solicitation of an offer to buy.

When it comes to alternatives, nothing beats common stocks. Money market rates are so low today that they barely cover the annual expense ratios required to operate the fund. We may see a return to post World War II short-term rates that were almost zero.

In short, we need to wean ourselves away from the high expectations left by the roaring '90s. Even the spectacular stock market gains of November/December may be nothing more than Wall Street's effort to sink the hook once again. What we know for certain is that interest rates are low and will stay that way for a while. This affects us positively, and should lead to a careful consideration of "What's in this for me?" We're probably not as smart as our cats, but at least we should be asking their favorite question.

The securities markets are subject to the risks of fluctuating prices and the uncertainty of rates of return and yields inherent in investing and past performance is no guarantee of future results.

005, b