By Rick Glaze
Q: I have an aunt who has substantial assets but is in poor health. She is concerned that at some point she would not be able to take care of investment decisions, bill paying, taxes, and so on. No family member lives close enough to lend a hand. Is there a way for her to have these things done for her if she needs the help?
A: People have varying reasons for needing help in this area. Some are like your aunt, while others have children close by but they lack the skills necessary to handle financial matters. Many people have successfully utilized corporate trustees to hold assets, pay bills and take direct investment decisions. Unlike an individual, a corporate trustee is always around. In addition, it has no personal feelings about the tasks at hand and can usually act objectively.
At Glaze Capital Management we have worked with corporate trustees in a way that they maintain a close personal relationship with clients, heirs and beneficiaries while accomplishing the goal of getting the business done. The October program of the Glaze Capital Seminar series will feature a presentation on this topic. For more information, call 934-0920.
Q: I read that the dollar has gotten weaker. What is the significance of that, and how does it affect the average person?
A: For those who travel, you get a little less for your travelers checks and it costs you a little more for the hotel and dinner. But for financial markets and the economy, it is a somewhat bigger deal. Those companies that export products to other countries suddenly find their products are cheaper to the end user and therefore more competitive. A Ford car is cheaper for Europeans to buy, while Ford gets paid the same in U.S. dollars. On the other hand, imports are more expensive. A Japanese car, for example, will become more expensive, which makes U.S. cars priced more competitively. Maybe that is why the Japanese are fervently trying to shore up the dollar.
Q: With the decline in the stock market, why has consumer spending stayed strong?
A: Long stock market sell-offs have always raised concerns about household wealth and the possibility of a curtailment in consumer spending. The “wealth effect” assumes that a loss of every dollar in stock wealth will equate to a loss of about three to four cents in consumption. But for some reason, the more significant contributor to household wealth, namely, real estate, rarely makes the analysis. Some think that housing is a bigger influence on household wealth effect because some 67 percent of American households own homes. Only 50 percent of households have a link to the stock market. The reason for resiliency in consumer spending during this recession may have been the strong performance of the housing market.
Send your investment questions to the Town Crier for inclusion in the column. Rick Glaze is president of Glaze Capital Management Inc. in Los Altos, and investment advisor to individuals. For information, logon to www.glazecapital.com.
