If you are in the market to buy a new car or just looking for a reason to upgrade your existing car, then you could not have picked a better time than now. Apart from local and foreign automakers desperately cutting prices to stay in business or to revive flagging sales, the US government is doling out tons of free stimulus money and tax credits/deductions to entice new car purchases. I have written about the three main programs in detail, but here is a summary and ways you could take advantage of all three of these programs at the same time.

1. New Car State or Local Tax Deduction

This stimulus funded legislation provides tax breaks for new vehicle buyers by giving them a federal-income-tax deduction on local sales and excise taxes. It enables taxpayers to buy now and get cash back later on their 2009 tax returns (filed in 2010). The deduction is limited to the state and local sales and excise taxes paid on up to $49,500 of the purchase price of qualified new foreign or domestic cars, SUV's, light trucks, motor homes or motorcycles that weigh no more than 8,500 pounds. You can still buy a qualifying vehicle for more than $49,500 (e.g. an $80,000 BMW), but you will only get a tax deduction up to the specified limit. The deduction is only available to families making less than $260,000 (or $135,000 for single filers). It is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers. Further, the new vehicle must be purchased on or after Feb. 17, 2009, and before Jan. 1, 2010, to qualify for the deduction.

Value of Credit: The average new car purchase price the first 11 months of last year was $28,280, and the average used car trade-in value was $15,203, according to data from the National Automobile Dealers Association. States typically tax the difference — $13,077 in this case. So a 5% sales tax rate would be $654, meaning the deduction would reduce taxable income that much. Each state has a different car sales tax, so the deduction will vary by state. For states that do not have state or local taxes on cars, the IRS recently ruled that buyers are entitled to deduct other fees or taxes imposed by the state or local government. The fees or taxes that qualify must be assessed on the purchase of the vehicle and must be based on the vehicle’s sales price or as a per unit fee.

** Search and get multiple quotes for your next new car @ Yahoo! Autos **

2. Cash for Clunkers - Car Allowance Rebate System (CARS)

The Car Allowance Rebate System is a recently approved initiative that will help you pay for a new, more fuel efficient car or truck from a participating dealer when you trade in a less fuel efficient car or truck. Under this program, auto buyers will be entitled to discounts/vouchers of $3,500 or $4,500, based on the following criteria.

- Tade-in cars must get no more than 18 miles per gallon, have been built in 1984 or after, and have been owned and insured by the purchaser for at least a year. A consumer could then get a $3,500 voucher toward a car that got at least 22 mpg. The value of the voucher will increase to $4,500 if the new car is 10 mpg higher than the trade-in. Consumers will also be able to use the vouchers toward the five-year lease of a vehicle.

- A $3,500 voucher can go to a small light-duty truck that gets at least 18 mpg and is two mpg higher than the trade-in. A 4,500 voucher will be issued for a truck with a five mpg improvement.

- A $3,500 voucher will be issued for large light-duty trucks that get at least 15 mpg and are one mpg higher than the trade-in. A $4,500 voucher will be issued for a truck with a two mpg improvement.

- No trade in value: Because the old vehicle will be destroyed, the credit is given instead of the regular trade-in value — not in addition to it — though some dealers might compensate customers for the vehicles scrap value.

The vouchers under this program will be issued electronically to dealers almost immediately upon the point of sale, so the credit should be available at purchase. This program has limited funding of $1 billon (enough for about 250,000 consumers) and will likely expire by Nov 1, if not sooner. For more details, see the official government site cars.gov; and to determine if your car meets the fuel efficient requirements go to FuelEconomy.gov

Get your best new car quote from Yahoo! Autos

3. Green Energy Car Credits

President Obama’s stimulus bill provides a modified credit for qualified plug-in electric drive vehicles purchased after Dec. 31, 2009. To qualify, vehicles must be newly purchased, have four or more wheels, have a gross vehicle weight rating of less than 14,000 pounds, and draw propulsion using a battery with at least four kilowatt hours that can be recharged from an external source of electricity. The minimum amount of the credit for qualified plug-in electric drive vehicles is $2,500 and the credit tops out at $7,500, depending on the battery capacity. The full amount of the credit will be reduced with respect to a manufacturer's vehicles after the manufacturer has sold at least 200,000 vehicles.

This credit is in addition to the Hybrid Auto Credit for vehicles purchased or placed into service after December 31, 2005 which may be eligible for a federal income tax credit of up to $3,400 (see IRS site for list of qualifying vehicles), Credit amounts begin to phase out for a given manufacturer once it has sold over 60,000 eligible vehicles.

Can I use the above credits together?

Yes. You can use the above credits together. For example, you can trade in your qualifying old car under the cash-for-clunkers program to get the discount voucher and also claim a deduction for the sales and excise taxes you pay on the new car. Here is a hypothetical example from a recent Vanguard article on this topic:

Johnny is currently driving a 1995 Dodge Caravan that has an estimated fuel economy rating of 17 miles per gallon. Because it has 90,000 miles and is in only fair condition, it has a trade-in value of $350, according to Kelley Blue Book. However, if he trades it for a 2009 Nissan Versa, which has an estimated 29 miles per gallon fuel economy rating, he would qualify for a $4,500 voucher because the new car's rating is at least 10 miles per gallon more than the Caravan's. That would reduce the cost of the new car from its manufacturer's suggested retail price of $10,710 to $6,210.

In addition, because he earns less than $125,000 a year, Johnny can deduct the sales tax he pays on the vehicle from his federal income taxes next year. Finally, Johnny would save money on gasoline each week because of the greater fuel efficiency of his new car.

To get all the benefits you must still meet each of the individual program requirements and not claim the same tax break or deduction twice. Further, only one credit of each type may be issued for joint registered owners of a single eligible trade-in vehicle.

What's the difference between a tax deduction and a credit?

Many of the tax breaks on new cars are either deductions or credits, and it is important to understand the difference. A tax deduction reduces the amount of income for which you are taxed. For example, if your taxable income were $50,000, a $2,000 deduction would reduce it to $48,000. So, you would pay taxes on an income of $48,000 instead of $50,000. This means your actual savings would be a fraction of the $2,000 deduction. A tax credit reduces the total amount of income tax you owe. So, if you owed $10,000 in federal income tax, a $2,000 credit would reduce the amount you owed to $8,000. With a credit, your actual savings would be $2,000

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With all these “money” options, the car market is definitely a buyer’s paradise for now. Along with some research and strong bargaining at the dealership, new car buyers can easily save thousands on their next shiny new car. If you have any questions, leave a comment and I will try and get you a prompt answer. I will update this article as more information comes to hand and encourage you to subscribe (free) via Email or RSS to get the latest posts.

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President Barack Obama said recently that a second [multi-billion] economic stimulus package isn’t needed yet, though he expects the U.S. economy and unemployment to worsen this year. He also acknowledged that due to worse than expected economic factors, initial forecasts from his administration missed the mark. The original $787 billion stimulus bill was rushed through Congress and signed in February 2009, with his chief economic advisers forecasting that it would help hold unemployment below 8 percent. It included tax cuts and spending on infrastructure projects that the president pledged would save or create 3.5 million jobs. Obama defended his initial stimulus projections, saying the economy worsened once the legislation was enacted only weeks into his presidency. “Nobody understood what the depths of this recession were going to look like,” Obama said. “It was only significantly later that we suddenly get a report that the economy had tanked.” However, the President did acknowledge that he was not satisfied with the progress made around distributing the stimulus funds and that the administration had to do more work with a program to modify existing mortgages, which hasn’t “been keeping pace with all the foreclosures that are taking place.”

While the current administration does not think a second economic stimulus package is needed in the near term, I do think they will be back next year or the year after if the economy does not improve as indicated by a few of the following triggers or key economic vital signs:

- Unemployment rate nears 15%. This may seem far away, given the current unemployment rate of 9.5%, but in California it is already approaching 12%, and America's most populous state is a good leading indicator of national trends. Further, many economists think that the real unemployment numbers are much higher given part time, seasonal and non-participating workers are not reported in the unemployment figures. Should the official unemployment rate hit the 15% mark, it is almost certain that the Obama administration will be back for more funds to stimulate the economy.

- Home prices continue falling, declining 50% since the July 2006 peak. Median home prices are already down more than 26% to date and while there are signs of stabilization, worsening unemployment and rising interest rates could prompt further declines. In states like Florida and California, real estate values in some of boom areas are already down much more than 50%. With short sales and foreclosures still rising in many areas (reaching a record 1.8 million in May), despite government stabilization programs, their looks to be much more pain ahead. Even the new home buyer tax credit that have prompted many new home buyers into the market, look to have only provided a temporary buffer in now that interest rates are rising again.

- Democratic controlled congress increases majority in mid-term elections. President Obama still has an overall approval rating of 65 percent and the support of a democrat controlled Congress. In the mid-term 2010-2011 congress elections there is a good chance congress could come further under democratic control - reaching a filibuster majority, thereby making the Republican party virtually helpless in stopping any additional stimulus legislation. A worsening economy and support from the improvised masses waiting for more government handouts, will allow a more Democrat friendly consumer-focused stimulus package to be passed.

- Stock Markets Free Fall (Dow falls to 6000) and a large financial institution collapses. The stock market has been on a nice run of late and many investors are returning to the market as a sense of optimism pervades. However, as we have seen countless times, the market can fall just as fast as it rises leaving many investors licking their financial wounds. Given the stock market is a leading indicator of the economy, a sharp fall in the stock market generally signals further economic gloom and doom ahead. This would be compounded by a collapse of one or more large financial institutions, a primary trigger for the stock market collapse late last year. If all this comes to pass, the government will be forced to enact fiscal policy, like another consumer or corporate stimulus, to stem the tide.

- Global Markets Turmoil: The key to a sustained economic recovery will be a revival in real growth amongst the BRIC economies. These are the Brazilian, Russian, Indian and Chinese economies, that accounted for most of the economic growth over the last decade. They have the largest populations, are relatively debt free and are the biggest buyers of all things American. These new economies and their consumption will be the key for American growth in the 21st century. If these economies collapse, either thorough political problems of spiking inflation then the US economy will feel the pain.


To me the key statistic is unemployment. If consumers do not have jobs or feel in danger of losing their current one, then they will cut back on discretionary spending, delay buying or upgrading homes which all results in falling corporate profits and a worsening economy. If unemployment is “well into the teens” and still rising, it would indicate broader problems in the economy and serve as a strong catalyst for more fiscal stimulus actions. So despite record deficits and government debt, the administration will be back for more and I think they will be asking upwards of $1 trillion dollars for the next economic stimulus package!

What are your thoughts? Do you think a second economic stimulus package is likely and if so, how much?

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~ Obama's 2010 - $3.6 Trillion - Budget and My Money from Taxes to Health Care
~ Announcing America's Ten Trillion Dollar National Debt
~ Oil's temporary respite
~ How Long will the Current Recession Last? Not as Long as You Think.

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While reviewing and updating my 401K allocations at Fidelity, I noticed this relatively common graphic showing portfolio mixes (allocations) based on an investor's risk profile. Generally speaking most financial advisers and traditional market wisdom tell you that your portfolio allocation should be based on your age, which determines the duration of your investment. The younger you are, the more aggressive, while the closer you get to retirement, the more conservative one should be. So a 25 to 30 yr old would predominantly have a stock based portfolio, while folks in their 50's would be more invested in bonds and cash.

However, after the year we had in the stock market, should this be the primary criteria we use? No. In fact I think market conditions, as much as age and other factors, should determine the optimal asset mix. Using the graphic below one should adjust their portfolio regularly based on market conditions, need for liquidity and how much risk they are willing to take. I refer to this as managing across the risk spectrum.

For example, rather than blindly invest in a target retirement fund or just leave all your money sitting in a single asset class, anyone that contributes to a 401K, IRA or regular investment account should adjust their portfolio up and down the risk spectrum on a periodic basis. You don’t have to do this every other week, but I would say once every quarter or at least twice a year. For example, early this year with the market in free fall, I changed my 401K contributions to be geared more towards bonds and money market funds. This would seem illogical for someone in their 30’s if you followed what the pundits tell you, but that move saved me thousands of dollars as the market plummeted.

Some would argue that I should have kept on investing according to my risk profile and taken advantage of dollar cost averaging, but as I discussed recently, when markets are in free fall, dollar cost averaging is a poor strategy.

Rather than keep investing in a losing asset, I just changed my 401K contribution and portfolio mix in line with my new risk spectrum at that point in time (conservative). This minimized my losses and allowed me to build my cash based reserves. Then, as the economy showed signs of improvement and international markets started picking up recently, I moved up the risk profile (growth) and started investing more in stocks. Since March this has yielded me a 14% return (and about 25% on my new contributions).

I will revisit my 401K account in a few months and based on where I think the economy and market are going I may well readjust again. The point is that in current and future markets, one cannot just sit back and hold onto a losing portfolio, justifying their decision by saying, “I am young, my portfolio will recover…”. That’s the old paradigm, and in the new market smart investors are the ones who pay attention and adjust their short and long term investing strategies. Remember, it takes a 100% return to recoup 50% in losses. So if you haven’t checked your portfolio in a while, now may be the time. If you are uncomfortable with this aspect of investing then see a professional.

I’ll provide some more specific investments for the various risk spectrum's in future posts (subscribe via the options below), but if you are trying to find funds that fit the above risk profiles check out the research section of your IRA or 401K provider. For more independent and broader research check out the free subscriber section at Morningstar.com.

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~ Dividend Reinvestment Plans (DRIPs)- A great investment

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A strange phenomenon is taking place – credit card companies are willing to really negotiate on how much you repay of your overdue debt. With revolving credit, a close approximation of credit card debt, totaling $939.6 billion in March of which 6.5 percent was at least 30 days past due in the first quarter, banks have little choice but to come to the table and work out a deal. After all, they would rather get back some of the monies owed to them as opposed to letting the entire debt be wiped out due to bankruptcy or extended delinquency. The NY times brought us the story of a Mr. McClelland who worked out a deal with his bank to only pay half of his $5,486 balance. He was paying fitfully on his card, which was canceled for delinquency. In April, HSBC offered him full settlement at 20 percent off. He declined. A few weeks later, it agreed to let him pay half.

Why are banks doing this? As they confront unprecedented numbers of troubled customers and the recently approved credit card reform bill, credit card companies and banks are increasingly doing something they have historically scorned: settling delinquent accounts for substantially less than the amount owed. In the current economic climate with unemployment approaching 10%, some banks have been known to forgive up to 70 percent of a consumer's debt. Why? Not for your sake, for theirs. Banks fear that the economic downturn is only going to get worse in the coming months, so they're taking what they can while they can. After a balance has been delinquent for six months, regulations require the card company to reduce the value of the debt on its books to zero. If a borrower has not paid by this point, chances are he never will. Only a few creditors are willing to confirm the practice. Bank of America and American Express say they decide on a case-by-case basis whether to accept less than the full balance. Other card companies refuse to discuss the subject, but their trade group, the American Bankers Association, acknowledges that settlements are becoming more common.

So what do you do? If you are in true financial peril, the brink of bankruptcy, you might want to approach your bank or credit card company (or the debt collector assigned to the account) and ask to pay off less than the full amount. You will need to show evidence of your hardship and then justify why you cannot pay your debt. There is then a good chance that they company will settle for much less than what is owed, but they will want payment straight away. If you want professional help you can hire a debt settlement firm, which for a fee will bargain with the creditor on your behalf. This is useful in situations where the debt is significant enough to justify the professional fees.

While this may seem like a sweet deal for many, remember that even if you get debt relief through negotiating your credit card repayment, you will still take a big hit to your FICO credit score. Also don’t expect credit card companies and issuers to heavily publicize this as they do not want to promote the idea that settlements have become merely a matter of asking nicely. Still for those facing serious credit card debt issues, escape may just be a phone call away.

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I just completed my first home purchase – a long and challenging journey that eventually had a happy ending. I have few regrets in becoming a home owner, but little did I realize that when I started my home buying journey a few months ago that things would be as difficult and meandering as they were. Here are a few things that I experienced/learned along the way that many current home owners can relate too and hopefully benefit some new or soon-to-be home buyers.

- Your real estate agent is not your best friend. I must admit that I had a pretty good real estate agent, who I found through a referral, but I think my wife and I got too reliant on her advice/recommendations and always assumed she was putting us first. For example, the people she hired for our home inspection were her contacts and ended up being expensive and doing a poor job overall. They missed a number of things which I had to end up fixing after moving in that I could have got the seller to fix before closing. In retrospect I should have found an independent home inspector who was more interested in my interests rather than making sure they didn’t jeopardize the sale for my realtor. At the end of the day, your realtor is a business associate; not your friend of confidant.

- A crash course in mortgages, interest, insurance and taxes. As a personal finance blogger I thought I knew more about taxes and real estate related finance than the average person. Well, I discovered there was a lot more to learn and despite writing several posts on the topic of home buying, I came across many new terms and documents that I had never seen before. You’ll ending up having to learn a lot of things when buying a home and my advice is to make sure you get any key documents beforehand, do some research online and don’t sign anything you don’t feel you understand. There is too much on the line and there is no such thing as a dumb question. You are paying a lot of money to your realtor, broker and banker so you deserve a prompt and honest answer to any questions you have.

- A not so good faith estimate. The good faith estimate (GFE) you get from various lenders is going to be one of your key documents when "shopping around” for the best loan and to know the true cost of buying your home. Every lender will prepare a GFE differently so make sure you do a line by line comparison of costs (and ask questions if you are unsure). Then use the GFE’s to make sure your preferred lender is giving you the most competitive costs – trust me the costs vary enormously by lender as they try and squeeze every dollar. Reading all the GFEs is the most likely cause of your physical headaches related to this process – especially for those who dislike all things financial – but it is also the source through which you can save the most money at closing and through the life of the mortgage.

- Money out and then more money out. One thing you will soon realize during the home buying process and soon after you move in (especially if you are moving into an older house) is that your cash flow will be largely going one way. Out. Home inspection costs, appraisal fees, agent fees, administrative fees etc, will all have to be paid. At some point you will just throw your hands up and question when all this well end. Soon I hope! But this is the reason for my next point.

- Add 25% to your estimates and for cushioning unplanned expenses. No matter how good your discipline and contingency plans, add 25% to all your estimates. This includes your maximum purchase price, closing costs and time to find your right home. Buying a home is a long, emotional and varying process so make sure you have sufficient resources to see you successfully through.

- Patience and relationship stress. If you want to test your patience and your relationship(s) then buying a home is the toughest exam. I know of a number of people who have spent months, if not years, trying to find the right home. Even with the recent drop in home prices and spike in foreclosures/short sales - many would be buyers have found it hard to get the home they want. Either it fell through due to bank issues or other buyers swooped in. I know one friend who has lost two houses in the last month on which he had contracts, only to see if slip through a week before closing. The other component of buying a house with your partner or relative is the stress of going through the searching, financing and closing process. I know my wife and I had many a testing time. Luckily it worked out and actually made us stronger (I think!)

- Moving into your home and repairs. Just when you finish dealing with the headaches of the home purchasing process, comes the frentic phase of moving. This requires you to change all your addresses, organize movers, end your lease (if renting) or sell your house (which you should have done before buying). All this happens within a few short weeks and before you know it, you are in your new place. Exciting – yes. End of all the hassles – no. There is dealing with the all the minor and major household repairs, especially annoying are the ones your overpriced inspector did not pick up. If you are not a handy man (like me), you soon learn to become one after seeing how much general contractors and tradesmen charge. I am sure all electricians and plumbers are millionaires given the rates they charge! In any even all the repairs mean more money out and any new home buyer stimulus I may have gotten has long been spent.

- A New Budget : One thing you soon discover, especially if moving into a bigger or first home, is that your budget will jump significantly. This is mostly due to the higher mortgage payment, but the costs associated with maintaining a house are also much higher than an apartment, townhouse or condo. So before you start out and to avoid more headaches along the way, draw up a budget (using my 25% inflation factor) to see what you can really afford to buy on an ongoing basis. Try and live that budget for a few months before buying the house. This will give you a much more realistic idea of the costs around running a household. Much higher than you may think.

I am still very much a new home owner, which means more challenges and learning experiences along the way, but until you actually go through the home buying process you can never appreciate how involved it is. Thankfully in most cases, the prize at the end and the satisfaction of owning your own place make it a worthwhile journey.

Picture credit: njrealestatewire.com

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Rates on all things financial are heading up. This is good news for some and bad news for others. Savings rates on high interest savings and money market accounts are up after falling to multi-year lows. However on the flip side, new home buyers or those looking to refinance are seeing mortgage interest rates rise from historic lows. On Wednesday the WSJ reported that rates on 30-year fixed-rate mortgages climbed to 5.79%, up from 5% two weeks ago, according to HSH Associates. That jump will cut roughly in half the number of borrowers with an incentive to refinance, according to FTN Financial. Refinance activity at J.P. Morgan Chase & Co. is already "really down" since rates began rising, a spokesman says. A rate of 4.75% "seemed to be the switch" that turned on refinance activity, he says. Now, rates are a full percentage point higher.

Savings rates

The top high-yield bank savings accounts are paying interest rates of around 2%, compared to a 0.5% national average. Leading the pack is a new offering from Ally Bank (formerly GMAC Bank) which is starting to encroach on the space occupied by market leaders ING Direct and HSBC Direct. I recently signed up for a free account - via a promotion where no minimum deposit/balance was required. There offering is quite standard relative to the leading providers but the feature I liked best was that they calculate and compound interest daily, rather than monthly or quarterly like some other big banks. The more often interest is compounded, the faster it grows. They also have the leading Certificate of Deposit (CD) offering which is good for longer term savers that like to use laddering.

If you want to park some of your cash, then high yield saving accounts are a better deal right now than money market funds (which are offering a miserly 0.16% on average) and may even be more secure since bank deposits are insured by the Federal Deposit Insurance Corp. up to $250,000 per depositor, a limit recently extended to 2013. While money-market funds are generally very safe, the insurance program set up after the financial crisis covers only investments that were there as of Sept. 19, 2008 and is set to expire this September.

Finding the best saving interest rates. I wrote about some other good high yield savings accounts in a previous post, but if you are looking around do some research via bankrate.com (for savings accounts) or Morningstar.com to compare various money market fund offerings. Just take care to read the fine print to avoid teaser rates or monthly fees. Also, be sure the account is FDIC-insured and that you're comfortable with any minimum balance required. Several on-line banks, such as DollarSavingsDirect and iGObanking, tend to offer better-than-average rates. But you must be willing to do your banking online or by mail and keep in mind that transfers between banks can take two to three business days.

Mortgage Rates - Where are they headed?

Unfortunately the answer is up. The underlying cause isn't hard to find. Rising government debts, and burgeoning hopes of an economic recovery, are pushing up long-term interest rates on government debt. The yield on the 10-Year Treasury, which was barely 2% near the end of last year, surged to 3.67% late last week before settling back slightly. And that, in turn, pushes up rates on other long-term loans. Be aware this rate hike - to 5.25%, from 4.75% recently - can add quite a bit to your expenses. It will cost an extra $50 a month for someone buying a typical $200,000 residence with an 80% loan.

So if you are on the fence to refinance or purchase a home, it is best to lock in a lower rate now. I'll talk about how I was able to get 4.5% on my 30 yr conventional loan in a future post (subscribe for free updates), but the best (and most obvious) tip is to always shop around before you commit to any financial product or service. You will be surprised at how much banks and brokers are willing to negotiate. Particularly if you have a good FICO credit score!

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The recent run up in Apple stock (AAPL) over the last three months has made me one happy stock holder indeed. My ill fated and much disparaged purchase last year (see comments) of the stock at $180+ had many saying that I was crazy to buy. I always had a long term view of Apple, and even though I did not anticipate its sharp fall along with the rest of the stock market, I kept on holding on to the stock. Now, I am down less than $40 per stock and have a strong feeling that AAPL is set to resume its run towards $200.

So what are the reasons for Apple's stock run and is it worth buying now?

New iPhone model and Operating System: Apple plans to introduce a new operating system that will add a number of new features like Cut and Paste, along with capabilities that application developers can use to make better software for the iPhone. The company is also expected to introduce a new iPhone model at it’s annual Worldwide Developers Conference, that will have the new software and capabilities preloaded. The new iPhone model is expected to have upgraded memory, faster processor and improved camera/video graphics. A lower price point and expanded distribution network locally and globally (see below) may also entice a number of new subscribers, which will drive sales from its fast growing App Store.

Apple is bigger than Steve Jobs: There was a lot of consternation when CEO Steve Jobs was forced to take an extended medical leave of absence due to a recurrence of his pancreatic cancer. However, the company seemed to manage without a hitch and the share price has rebounded more than 30% since the formal announcement. Steve Jobs has still been involved with various product development initiatives, but day to day running of the company has now permanently been transferred to new leadership. Once Jobs returns later in the summer, the company will have an ultra strong leadership team to drive the company’s future growth.

The Apple Media Tablet: Seeking Alpha reports that the coming Media Tablet may very well have the same positive impact on Apple stock in 2009 as the iPhone did in 2007. Apple is on the brink of adding another leg to its innovation empire as they prepare to introduce us to an entirely new product category. Manufacturing reports suggest that the Media Tablet will have a 10 inch touch screen that could be even thinner than the iPhone. It will be the ultimate newspaper/magazine replacement catering to those Internet users looking for the perfect portable reading device. Wireless connectivity will further expand the dominance of Apple’s App Store as games, books, education and news software will finally function on an ideal piece of hardware. The Media Tablet will be the first computer with the capability to utilize the App Store platform that has already generated over 1 billion downloads since it was launched in July 2008. According to the WSJ, Steve Jobs has been working on this Media Tablet from home during his leave of absence and is expected to unveil it at the Worldwide Developers Conference.

Verizon Deal: Many have been wondering what Apple and Verizon have been discussing in their confirmed meetings over the last six months; consensus speculation anticipates that Verizon might be on the verge of offering the iPhone as soon as AT&T’s (T) exclusivity deal expires. Bernstein Research analysts Craig Moffett and Toni Sacconaghi jointly took a look at this deal and they contend that adding Verizon could allow Apple to boost sales by at least 100% in units (though less revenue per unit may result as subsidies fall). Adding Verizon, they explain, could significantly increase the addressable market. It has more subs than AT&T does, for one thing. And Verizon’s customers are largely untapped, while more than 10% of AT&T’s post-paid subs already are using an iPhone at this point. Eventually, the Bernstein analysts believe, Apple will abandon the exclusive relationship with AT&T to maximize the addressable market.

Tech Sector Recovery: As the economy shows signs of growth, so too will the technology sector and Apple. The company has handled the economic downturn better than most companies and its $30 billion or so in cash reserves has allowed it to invest in product development and marketing as competitors have cut back. If history is any guide, a significant part of any increase in consumer tech spending will be directed towards Apple products and services. So as the economy recovers, so too will Apple sales and stock price.

There are off course risks with investing in a growth company like Apple and competitors will continually challenge it on the service and product front. But Apple’s large cash reserves, strong product pipeline and great leadership make it a stand out stock to own. Two ways to play the stock are to buy some December/January $180+ call options or to just buy the stock if you plan to hold for the next 3 to 5 years.

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Bloomberg, along with the WSJ, bring us an interesting viewpoint on the US automakers path down bankruptcy and the debate on who really cares. Living outside Detroit, I do feel sorry for the personal and financial tragedy that many are facing due to the bankruptcy of the automakers, but from a national/investment standpoint I am really unaffected by the failure of these two American icons. In fact I almost think, after years of life (government) support and bad business decisions, bankruptcy proceedings are the best thing that will happen to these companies. The stock market, politicians and the rest of America (ex-Detroit) seem to agree as well.

"The American people want GM to go bankrupt," Dobski, a retired GM executive said. "They don't care." The disconnect between how the auto industry is perceived in Detroit and in the rest of the country was underscored in an April survey by CNN; it showed 76 percent of Americans favored allowing GM to fall into bankruptcy rather than extending further government aid.

"Bankruptcy is an incredible stigma," said Dobski, 65. "I hate to see GM connected with that. GM is such an icon. GM is this area. It's Detroit." Detroit residents are struggling to come to grips with what would have been unthinkable as recently as 2004, when GM was completing a 10-year run in which it earned $41 billion, milking profits out of jumbo sport-utility vehicles like the Chevrolet Suburban and Silverado pickup trucks.

Dobski says he recently went to Washington with a group of "Main Street bondholders," lobbying Congress for more say about the deal the government was cutting with GM. Both Republicans and Democrats seemed to dislike the company, if for different reasons, Dobski said. Their staffs didn't seem to understand the industry's reach, he said.

Competitive Pressures

For half a century, between the 1920s and the 1970s, GM seemed to have an instinctive feel for what Americans wanted before consumers themselves even knew it. Chrome, tail fins, muscle cars and even the first catalytic converters that let cars run on lead-free gasoline were developed at GM. But the company signed generous labor deals during the 1970s, including the right to retire after 30 years with full pension and benefits, partly because it believed the contracts would cripple its smaller competitors, Ford and Chrysler. Then along came Honda, Nissan and Toyota, which didn't have to deal with labor contracts at all. That was the beginning of the agonizing decline

The inability to get people outside the region to understand Detroit auto makers was on display when executives of what were once called the Big Three appeared before Congress late last year, said James Blanchard, a former Michigan governor. As a U.S. representative, Blanchard coached former Chrysler chief Lee Iacocca through similar hearings in 1979. "I'm shocked they weren't prepared," Blanchard said.

Washington's treatment of the auto industry, from the firing of GM Chief Executive Officer Rick Wagoner to the concessions wrested from employees and retirees, doesn't sit well with Detroit residents who saw the larger bailouts being given to Wall Street firms where management remained in place, said writer Kevin Boyle, a Detroit native. He won a National Book Award in 2004 for an account of Detroit race relations in the 1920s.

"There's a very strong mix of Midwestern resentment and class resentment that runs toward Washington policies," Boyle said. "It ties into a deep feeling in the Midwest that there's something more virtuous about making something than about investing money."

I have written about the US automaker bailouts and bankruptcies before and if the Chrsyler bankruptcy (last month) is any guide, then the impact of the GM bankruptcy to the overall economy won't be nearly as bad as feared. Unfortunately for Detroit, even the best case scenario offers little hope for residents in the near term. However, if the companies can emerge leaner, debt free and more efficient, then the long term picture is much rosier and pain now could reap huge benefits down the road as US automakers finally become 21st century companies.

"I'm confident that the steps I'm announcing today will mark the end of an old G.M. and the beginning of a new GM — a new GM that can produce the high quality, safe and fuel-efficient cars of tomorrow, that can lead American toward an energy-independent future, and that is once more a symbol of America's success," President Obama said. But that retooling, he said, "will come at a cost. It will take a painful toll on many Americans who have relied on General Motors throughout the generations."

Related:
~ $5000 Used for New Car Subsidy in the proposed Cash-for-Clunkers Program
~ New Car (up to $49,500) Sales Tax Deduction in Obama Economic Stimulus Package - Updated with IRS Eligibility Criteria
~ I Want My Bailout Too and Here's Why

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