By Lorraine Ell

The dramatic loss of value in 401(k) plans has prompted a fresh look at how the plans are managed and how much they cost. With the reduction in traditional pension plans since the Tax Reform Act of 1978, which established the savings plan known as the 401(k), more than half of all workers in for-profit corporations participate in these plans and depend on them to help fund retirement.

Lee Eugene Munson comments on mark-to-market accounting. Published on Seeking Alpha
Yesterday the house Financial Services Subcommittee run by Paul E. Kanjorski (D-PA) discussed mark-to-market accounting.

Why do you care? Some misguided wicks out there (i.e. Warren Buffett and Steve Forbes) have asked for the M2M (yes, we have a silly text friendly symbol for mark-to-market now, twitters rejoice!) to be banned. On one hand I say yes, but only if it applies to me as well. It would allow me to ask my clients to stop using their current portfolio balances and simply use the balances from 2007. This would make me look spectacular, my referrals would shoot though the roof, and nobody would call concerned about the future of their retirement. The problem with this is that it is a fraud. People seeking to ban the M2M rule are asking the investing public to support the next great Ponzi scheme. The only difference in this scenario is that trades are placed and the money is invested in bank debt.
Read the full article here.

Lee Eugene Munson and Patrick Kirts present an economic outlook. Published on Seeking Alpha

Thomas Lee, US Equity Strategy at JPMorgan, generated some buzz in the past few days when he noticed that the twelve-year-low reached by the Dow last week had only happened two other times in history. The others occurred on April 3, 1932, in the depths of the Great Depression, and on December 6, 1974, after the first oil crisis. We now know that recovery in the market was soon to follow, and that the respective recessions ended four to nine months after, although unemployment had yet to peak. In both cases, the market popped and drew in the crowds. Is it really different this time, or is recovery right around the corner?
Read the full article here.

Lee Eugene Munson and Patrick Kirts analyze Ford Convertible Preferred Stock. Published on Seeking Alpha

Last fall Portfolio Asset Management discussed the merits of the 6.50% Cumulative Convertible Trust Preferred Security (F-PS). This trust was also known as Ford Motor Company Capital Trust II. The idea was simple, get paid while you wait for Ford to do nothing but keep on trucking. Well, last week we found that like the homeowners that bought too much house and asked the banks to lower their mortgage rate, Ford (F) just can’t pay for their preferreds.
Read the full article here.

Lee Eugene Munson and Patrick Kirts analyze paper companies. Published on Seeking Alpha

At Portfolio Asset Management, we love a good fire sale. However, we don’t want to get stuck holding the bag for an industry that is going broke. Remember, you can’t live under a worthless stock certificate. Last week on CNBC we were asked about the casual dining sector. Our response was that the only thing on the dollar menu was the price of the stocks, some of which will go bankrupt. The same thing has already happened with the paper sector. On Friday the 13th, the American Forest & Paper Association showed an unprecedented decline of 25.3 percent in January 2009 from a year ago. Smurfit-Stone went belly up last month and others are on their way.
Read the full article here.

Lee Eugene Munson and Patrick Kirtz analyze Horizon Lines. Published on Seeking Alpha

Horizon Lines, Inc. (NYSE: HRZ), the nation’s leading domestic ocean shipping and integrated logistics company, is an excellent example of a company with a strong economic ‘moat’. Portfolio Asset Management has been looking for some protectionism plays as the stimulus plans take form, as I mentioned on CNBC during my February 2nd interview on Closing Bell.

HRZ is the primary beneficiary of Congress’ 1920 Jones Act, which states that a vessel transporting cargo from one U.S. port to another, whether via wholly domestic or foreign ports, must be owned, built, and crewed by Americans. More than one billion tons of the two-and-a-half billion tons of annual maritime cargo in the U.S. falls under Jones Act control. Horizon’s competition, therefore, has an expensive barrier to entry into the domestic maritime shipping market. When was the last time you saw a cargo ship being made in the U.S.?
Read the full article here.

Lee Eugene Munson and Lorraine Ell create a balanced investment strategy in oil. Published on Seeking Alpha

The energy sector has a role in any portfolio. At Portfolio Asset Management, since the majority of our clients are retired and cash flow oriented, an investment in energy needed to balance appreciation with a stream of income. Our strategy was to combine high yielding, publicly traded LP and LLC, with an integrated oil company, and a raw commodity ETN.
Read the full article here.

Lee Eugene Munson and Lorraine Ell analyze Citigroup. Published on Seeking Alpha

We recently published a report entitled Citigroup: Too Big to Fail or Succeed. It turns out that nothing has changed. Now that we have news of the Smith Barney merger with Morgan Stanley (MS), more information is coming out about how bad it is. More importantly, we want to know if the preferred stock we have been trading, C-P, will be able to stay afloat. We will know more details today on the downsizing program.
Read the full article here.

Lee Eugene Munson and Lorraine Ell analyze the value of ETFs. Published on Seeking Alpha

When ETFs came on the scene 15 years ago, they brought a brave new world of efficient markets with low operating expenses and minimal tax liability. While the largest funds like DIA and SPY are designed in the spirit of the original ETFs, to track the large indexes, most of the newer ones do not even come close to this original purpose.

If the Efficient Market Hypothesis (EMH) is correct, then only two ETFs are needed at most, a world stock index such as the Vanguard Total World Stock Index (VT) and a bond index like the Vanguard Total Bond Market ETF (BND), in a ratio that fits your risk tolerance. Anything more, if we are to be philosophically true to the EMH, tips into the realm of active investing.
Read the full article here.

Lee Eugene Munson and Patrick Kirtz analyze Dow’s Rohm & Haas Acquisition. Published on Seeking Alpha

Facing fierce domestic opposition, the Kuwaiti government this weekend scuttled a deal, first unveiled a year ago, between state-owned Petrochemical Industries and Dow Chemical (DOW) to create K-Dow Petrochemicals. Wall Street reacted on Monday by sending not only DOW down 20%, but expressed a great deal of pessimism about another DOW deal. In July, it announced that it would purchase specialty chemicals producer Rohm & Haas (ROH) for $78 per share. This acquisition is essential to DOW’s long-term strategy as it incorporates a new and diverse product pipeline. ROH itself tumbled more than 16%, sending a clear message to investors: Kuwait has killed the Dow-Rohm merger. A closer look, however, suggests a very different account.
Read the full article here.