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Margaret's Musings (2007)

| October 30, 2007 – Trick or Treat… |

Halloween is upon us…and so far the season has been more trick than treat. Recently, we've been deluged with the fires in California, tropical storms/hurricanes threatening South Florida, oil prices heading to $100, and the plummeting dollar, not to mention continuing news of gargantuan losses in the sub prime lending arena from big banking centers that should have seen the "trick" coming. Bill Gross, famous bond manager at Pimco, refers to the dangers of the "shadow banking system". Where are the "treats"?

Well, despite the volatility, equities in general are performing well. Dividends continue to be increasing at a number of firms, volatility are giving value managers buying opportunities. Jobs are still plentiful and most people who own homes are not in danger of losing them.

In the early days of August, all assets classes seemed to be adversely impacted by the sub prime disclosures. However, in short order, this proved not to be the case and the benefits of diversified portfolios became apparent yet again. During times like this, the challenge is to not be "tricked" by all the noise and chatter on CNBC news. That's not to say that it's not normal to be somewhat "spooked" by the noise, as long as you aren't panicked into short term moves.

Unfortunately, once panic dominates thinking, one is likely to make disastrous decisions. So how do we survive what appears to be a tsunami of bad news? After all, even the best companies cannot escape all bad news. The real question is "can they survive it and thrive over the long term?" A similar question can be asked about our portfolios – are they structured for the long-term and to withstand bad news that will most certainly occur? After all, it is a near certainty that some component of your portfolio will not test well during turbulent times…which is why diversification is so key to risk management.

We visited our grandson and granddaughter in Dallas this past weekend. While there, we attended a pumpkin festival in beautiful autumn weather. The kids are all excited about their costumes and the treats they will rake in. In Miami we are much more concerned that the latest tropical storm, Noel, will mar the children's fun of going door to door looking for their goodies. Such is the delight of having children. They are our future and our hope.

Likewise I have enormous faith in the long term growth of our economy. The ability of mankind to adjust to adversity and needs never ceases to amaze me. Our little kids and grandchildren certainly reinforce this faith.

My best wishes to all of you for a few more treats this Halloween and beyond.


| October 16, 2007 |

I confess the first thing I do every morning is make my coffee and open up the NY Times. This morning instead of the coffee, the announcement of the Nobel Prize winners for Economics jolted my memories.

The memory jolt came as I was reading about the three economists who just won the Nobel Prize for their work in mechanism design theory. Interestingly, two of the three trained under Nobel Prize winner Kenneth Arrow, whom I also trained under during my honors study at Stanford.

Now, I do not for one nanosecond put myself in the league as these esteemed Nobel prize winning professors. However, as I read the article, I recalled my own studies of mechanism design theory and I realized that perhaps I'd taken for granted the impact that Professor Arrow's teachings have had on our work at The Starner Group.

I couldn't hope to explain how the three professors used the mechanism design theory to win the Nobel Prize. However, I can provide an explanation of the theory's basic tenets. Mechanism design is about achieving outcomes. The first step is to determine a desired outcome. Then, the goal of mechanism design is to determine how this outcome can be achieved with minimum costs to other objectives, taking into account potential obstacles, as well as staying aligned with goals and values.

Designing a financial plan is a modest form of mechanism design theory. We start with the client's goals, where the client is now, and what opportunity and constraints exist for achieving the goals. Next, we quantify family values, lifestyle, and time horizon. We use all of this information to create a plan, which is the roadmap to achieving goals, or as mechanism design would say, an outcome.

Outcomes are the driving force behind everything we do. Over the years, many prospective clients have come through our doors immediately asking about how to invest and what returns to expect. Our response is always the same – we have no idea!!!! At least until we get to know you. After all, someone whose goals can be easily achieved within their current lifestyle is entirely different than someone pursuing a "stretch" outcome. Since this is the case, we never work with a new client until we have a thorough understanding of their goals…and even though that's not exactly Nobel Prize winning stuff; I still think Professor Arrow would be proud.

| Wednesday, 10 October 2007 – Scott Weingarden's Day |

Today, Scott celebrates his 10 year anniversary with Raymond James. We haven't had a chance yet to celebrate his contribution to you, our clients and friends, and most of all to me, the founder of the Starner Group. After 10 years, I can't imagine the Starner Group without Scott. His love for the practice is expressed in his daily commitment to being here for every phone call, question, and service request. His quest for knowledge is part of who he is. All of you know of his good-nature, patience, and willingness to explain something until it can be understood by all.

I didn't want today to pass without expressing my "thank you" to Scott. To sum it all up, I decided to share a letter that Scott received today from Tom James, CEO of Raymond James.

Dear Scott:

Congratulations on celebrating your 10-year anniversary in October with Raymond James and our Coral Gables office. It gives me great pleasure to acknowledge your achievement of this important career milestone.

Since training with us, you have prospered as an outstanding producer within the very successfully Starner Group. You are to be commended as one of the early pioneers of team development within RJ&A. You hold a juris doctorate and are a member of the Florida Bar, as well as a CFP with membership in the FPA. Margaret Starner shared with me that you are on the verge of earning your CIMA – well done! Your service as a Young President of the Mt. Sinai Medical Center Foundation is an excellent representation of one of our core tenets, that of giving back to the community. We are fortunate to have you as a member of the Raymond James family.

I know that Margaret, Frank Amigo and Ira Federer join me in thanking you for your contributions to the Coral Gables branch and to the firm as a whole. I look forward to a long and profitable future association.


Thomas A. James



| Wednesday, 4 JULY 2007 |

As many of you know July 4th is a big celebration day in my family. As a reminder and for new comers to my Musings, on July 4th, I

  • Celebrate the birth of our country
  • Celebrate the birthday of my Daddy (who is now deceased)
  • Celebrate the birthday of Micaela, my oldest granddaughter
  • Celebrate the wedding anniversary of Dana (my daughter) and Kenji

For many years in Shelby, Mississippi, my dad hosted a July 4th barbecue. Each Independence day, a crowd gathered at my parent’s home off Hwy 61 to play mahjong, socialize, and eat my dad’s famous barbeque. In the evening there were fireworks galore. This became a local and family tradition, especially the barbeque and my dad’s sauce. This year I will be celebrating with my family, eating barbeque with my dad’s sauce and watching the fireworks from Micaela’s hilltop home near LA.. a long way from Hwy 61.

This July the Starner Group family will be ...

  • Celebrating the 45th birthday of Raymond James – big party in Tampa
  • Celebrating Bruce Cacho-Negrete, CFP® addition to the Starner Group ... .more about this
  • Celebrating Vanessa getting licensed for insurance and entering the extensive RJA Sales training program at our corporate office ... .to better serve all of our clients.
  • Celebrating Kathryn (Katie) Schwartz formally joining the Starner Group as our new service associate ... more about this

Bruce is Micaela’s father and my daughter’s husband ... I guess it’s easier to say Bruce is my son-in-law. Bruce had been many years with Accenture as a consultant in Change Management, with a focus in financial services. Scott and I decided to retain Bruce to observe our practice. In February after spending 3 weeks shadowing the Starner Group, Bruce presented to us and Frank Amigo, our branch manager, his report. Along with the recommendations, he asked to join our practice. Bruce was always fascinated with financial planning and had actually begun studying to be a CFP. I guess it is a natural to move from managing change in corporations to managing change in personal lives. This is so similar to my background of transferring corporate long range planning concepts to individual families.

In May, Bruce officially joined the Starner Group. In June, he quickly and successfully passed his Series 7 exam for Securities. In July and August he will be in the RJ Sales training program along with Vanessa. While he will soon finish the educational component for getting his CFP, he will need to complete the requirement of 3 years of experience.

Bruce grew up in Maine. Education was from University of Chicago and Executive MBA from Kellogg (Northwestern). He spent 10 years as a consultant with Accenture and 2 years with Sitaro, a technology marketing firm. Best of all he is father of my two grandchildren, Micaela and Cole.

Yes, he lives on the hilltop (same as Micaela) near LA. Fortunately, consultants at Accenture are accustomed to a life of travel. After some experimenting and achieving Platinum level on American Airlines ( son-in-law, Kenji, is head of Investor Relations at AAL) , Bruce flies to Miami from LA every week arriving 5:30 a.m. on Monday and leaves Thursday night at 8:30. He chats with his family every night via web cam ... technology is amazing.

Bruce’s experience, talent, enthusiasm, and drive have already made a difference to the Starner Group’s practice. Bruce is not only a bright young man ... he is lots of fun and sees humor everywhere. He has a loud booming voice and with his large feet ... makes his presence known. Another interesting fact ... his paternal grandfather lives in Miami too. He knows Parrot Jungle from his childhood!

Scott loves having another “guy” to scout investment ideas and strategies as well as discussing sports and the latest movies. I am very excited to have someone with extensive experience in observing and developing strategies to meet the challenges of a rapidly changing world. Our clients, like his corporate clients, want to successfully navigate the changing financial world to educate their kids, retire without financial worries, to afford health care, and leave a legacy for their families. Bruce is going to help us figure all that out for you!

And introducing a new voice on the phone – Katie Schwartz, our new Service Associate. Katie grew up in Miami, recently graduated from Wake Forest, and plans to also get an advanced degree at FIU in Latin American studies while working. Already she has mastered organizing the paper/data base in our office and is now working on improving our every day working processes so we all can better serve you.

Happy July 4th!!



| Monday, 25 JUNE 2007 |

All Roads lead to China ... even Thomas the Train ...

China certainly has been in the news a lot recently ... and not necessarily for the best reasons. Of course, we’ve all heard the ongoing complaints about outsourcing and China’s refusal to decouple the Yuan from the dollar. But now, we’ve also discovered contaminated dog food, tainted drugs, and, much to my grandsons’ dismay, lead paint in Thomas Trains. Speaking of Thomas, I’ve had a lot of challenging conversations in my life, but I still don’t envy anyone who has to explain to their three or five-year old why he can’t play with “James” and the “Merry Musical Caboose” anymore.

On the subject of China, as many of you know, I traveled there as a tourist last month. We were taking our son-in-law and some friends for their first visit and as such, we focused mainly on the historical sites, and of course, scooping up some bargains. My first trip to mainland China was in 1981.

In 1981 we traveled as guests of the Chinese airlines. Pan Am, for whom Roger worked, had just been awarded the first route between the US and China. The mayor of Shanghai was our host in Shanghai and our lodging was the old French embassy which had been converted into a hotel. There were two currencies: one for foreign visitors (which we called “funny money”), and one for residents of China. As foreigners, we could shop anywhere with our “funny money”. The locals, however, were not allowed to have any “funny money” and the local currency could not purchase goods in places like the Friendship stores, hotels, and other places deemed off limits to locals. Bicycles were the main mode of transportation in town. Cars were few. In fact at night, the bus driver would drive with only his parking lights, using his headlights only on the rare occasion that another vehicle was approaching. We would get up very early in the mornings to see all the people buying their breakfast from vendors on the street, practicing Tai Chi, and buying fresh food to prepare for dinner. After 7 a.m. or so, the vendors were gone ... everyone was going to work.

Often walking down the street, strangers would slip a letter into our hands with the hope you would mail it for them when we returned back to the US. There was still much residual fear from the Cultural Revolution when neighbors, friends, and families spied and turned on each other, and many worried that these times would return. All the airline engineers/managers we met during our visit had spent time in prison, some for 15-20 years, either for speaking English, being educated, or some other vague reasons. I recall asking them how they remembered their English so well after so many years. One told me that most of them practiced quietly everyday ... it kept them alive and mentally alert. I was curious as to why some spoke with English accents and others like Americans. They told me it depended upon which missionary school they attended ... English or American. [MS1][MS2]

Our guides were careful that we didn’t mingle or talk with the locals. In Beijing my daughters and I became attached to our guide, a lovely young lady who was quite bright, informed, and articulate. In the afternoons she would often have tea with us. She was saddened by the horrors of the Cultural Revolution and delighted that Madam Mao was punished. However she was just as horrified that our daughter, Lise, delighted in the opulence of the Forbidden City. As a courtesy, despite the rules, she allowed us to explore the city on our own. Each time, she gave us handwritten cards with instructions in Chinese to show to the taxi driver or store owners. We were careful to obey her about when to return to the group.

Now, China has changed just as dramatically as everything you read ... .except that the guides still try to control what you hear and see. Beijing is now a beautiful city preparing for the Olympics and Shanghai has been transformed into a “happening” place with fabulous restaurants, night spots, and shopping. The many bicycles are gone. The boulevards are now wide and teeming with cars. There is much hustle and bustle. Foreigners are no longer the only tourists. Now, droves of Chinese travelers explore the sights right beside them.

While poverty, a lack of standardized sanitation, and tough working conditions still exist in China ... it’s basically a country of happy smiling people. Being of Chinese descent, I am aware that the Chinese are pragmatic about life. On my flight home, I sat next to a Chinese businessman from Hong Kong, who was head of a big company in Shanghai. China, while they have lots of workers, still lacks top management talent. I had read that many big companies, especially hotel chains and retail chains, had recruited talent from Hong Kong, Singapore, Korea, etc. to run companies in China. This gentleman said he is being paid a Hong Kong salary and perks. His income tax rate in China is 65% which is also paid by his company. That means he lives very well in Shanghai. He felt that within 10 years, the local Chinese would learn quickly and begin to replace the foreign talent in order to manage and run their companies themselves.

I was curious as to what he thought about the conflict between freedom and Communism. First, he said, make no mistake ... Communism is alive in the leadership of China. China is not Hong Kong or Singapore. However, the workers are not even 10 years removed from when most of them were starving. Many of his workers still recall sharing one bowl of rice a day with the entire family. They will gladly accept limits on their freedom to have a full belly, a home, a car, television, a computer, and a future for their children. While they are resigned to some corruption and fraud, this doesn’t mean the workers won’t protest all injustices. They are just as concerned about safe medicine as we are.

As an outsider, it is awesome to see such progress in 25 years. I recall 25 years ago, an acquaintance at the World Bank said "have your children learn Chinese, it will be the language of the future.” As I said, the Chinese are pragmatic. They saw what English did for Singapore. Hence, China’s second language is English. Unlike Japan where few signs are in English, many signs in China are both in Chinese and English.

Trade, currency, inflation rates, interest rates, affordable goods ... .the road does lead to China. Our future is tied to their future whether we like it or not. A billion people with the drive “to do” and “to be” will have an impact. Still, despite China’s significant economic growth, beautiful buildings, and huge boulevards, many gaps in the country’s development still exist – enough to classify it as an emerging country. However due to their sheer size, when China stumbles, the world will feel it ... and, in my opinion, I am quite confident that stumbles will occur.

The advantage China has over other emerging countries is their rich history, belief in education, work ethics, and love of capitalism. Much of their folklore is based upon having a long life with health and prosperity. Even their afterlife is about prosperity. Their rituals are about good luck and bad luck, tricking or influencing fate.

However, this doesn’t mean that the US will lose economic world leadership. The sharing arrangement will change. China’s gaps will continue for a long time. The consumer market in China has the potential to grow significantly for both goods and services. The opportunities are vast for everyone.

The big obstacle is FEAR. Fear conjures up protectionist policies and limits open dialogue. Many of our economic problems and lack of competitive edge are rooted in policies that we have been reluctant to change. Politically it is easier to blame the foreigners.

Make no mistake. If my grandsons quit buying Thomas Trains and we all stop buying drugs from China ... .we will see quick changes in China’s manufacturing processes. Clearly, we are all tied together. Because even though all roads lead to China ... many of them start right here in the United States



| Tuesday, 19 JUNE 2007 |


Some very exciting news! On June 11, Barron's Magazine named me one of America's Top 100 Women Financial Advisors. Specifically, I was number 57. I know many of the women on the list and am honored to be included in their company.

Raymond James also received two important pieces of recognition recently. First, Forbes named the firm as one of America's 400 Best Big Companies. On the heels of that award, Business Week named Raymond James Financial as one of the top 25 providers of customer service globally. As someone who's been with the firm 26+ years, it has been exciting to have witnessed our evolution from a tiny Florida brokerage into a nationally-known brand that shares customer service honors with the likes of Fedex, Porsche, and The Four Seasons. That being said, I believe that the Raymond James story is just beginning in so many ways. We're expanding constantly, with new offices opening in states where we've never had a presence before. We continue to add new products and services, all of them with the sole purpose of helping our clients achieve their financial goals. As your advisors, our team's job is to sort through these products to determine which, if any, are suitable for you.

Tax News
The kiddie tax was recently extended to include unearned income of supported children under the age of 24. Thus, if you are actively supporting a child under the age of 24, the income earned in custodial accounts exceeding $1700 will be taxed at the parent's rates. Interestingly, this change comes barely a year after the kiddie tax age limit was extended from 14 to 18. Needless to say, this latest move may result in alterations to some of the tax planning strategies that have been in place for years.



| Friday, 1 JUNE 2007 |

A China experience

We just came back from a surface trip to China and I must say that we loved it for numerous reasons. Firstly, first class treatment is affordable. We had fabulous guides who were well-versed in the beauty of the new Beijing, the fascinating sites of the old Beijing, the incredible sceneries of the Yangtze River and the hip shopping districts of Shanghai. Secondly, we loved the pace – fast and exciting -- you don’t have a chance to think because there is always shopping and eating. The guides’ goals are to keep you happy. You are given just enough insights into their daily lives to see that all is well in China, and progress is the country’s most important goal. Perhaps best of all, the guides are remarkably skilled at finding “real” toilets.

My first time to mainland China was in 1981 and I had traveled to Hong Kong in 1961. This was my 4th or 5th trip, depending on how one counts. The change is as dramatic as everything you have read. When we arrived, one of my friends said “I am so impressed that the cars are in such good condition. They aren’t rusted, dented…they look so new”. I replied, “That’s because they are new.” Most of these cars didn’t exist 5 years ago.

Unlike many of my friends who travel to China, we always seem to end up using their medical system. Thankfully (for us), the Chinese have a rule when it comes to medicine -- guests must be treated as guests. In practice, this means if you are sick and go to ER, you go to the front of the line. In 1981 our 2 daughters and my husband needed medical treatment. All 3 were treated with Chinese medicine/herbs -- by concerned medical professionals with a clear sense of excellence. Almost miraculously, all three got well in record time.

As luck would have it, my husband, Roger got sick on this trip as well. We had just begun cruising on the Yangtze River to see the beautiful 3 Gorges and had two days before we would dock. The Chinese acupuncture doctor did the best he could and was extremely attentive. We were fortunate that his office was two doors from our cabin. This time the herbs were not so effective.

As soon as we docked, we were met by a young medical intern and a nurse in an ambulance. They soon determined that Roger should go to the hospital.

Once inside the ambulance, Roger and I noted that there was nothing medical about it – except for the fact that it could hold a patient on a gurney. Wires were hanging from where the light bulb should be. There were no life support systems. Thankfully, the hospital was only a few blocks away. Our guide followed behind us, with my daughter, her husband, and our friends in tow. At the hospital, our guide translated and helped with decisions, all the while reassuring us that were in the best hospital in the town, which had a 4 million population. I knew she would only tell us good things…but I decided believing her was better for us. Guides in China are trained to provide you with information on “as need” basis and in such vague term you think “bad news” is “good news”.

As soon as we arrived, an MD appeared. He and our guide chatted for a long while -- finally the guide told us that because Roger was a foreigner, the MD needed management approval to proceed with treatment. I thought – “oh my gosh, this will take hours.” Surprisingly, the approval came in a matter of minutes and Roger’s treatment began almost immediately! As we waited, an attractive nurse kept popping up at my side with a green pad and pencil. Every time something was done, she showed me the cost written in Chinese. For example, about 10 minutes after arriving at the hospital, she showed me the cost of the ambulance and medical services on the ship. Each time, I would just say “o.k.”

We decided that Roger was well enough to travel to Shanghai so we could catch an early plane back to the USA. Before we left, the nurse again showed me the green pad with a total -- the entire bill was around $40, which included the ambulance and ER!! In addition to the money, I tried to give them some chocolate…they said the laws didn’t permit such. So, after many thank you’s we continued our journey. In contrast, the ship doctor asked if we had insurance, charged us over $700 and took the chocolate. His attention was worth it.

Once back in Miami, we headed for the ER at the local hospital to continue Roger’s treatment. Despite the fact that we were the only ones in the ER, we waited almost 3 hours before we saw any medical personnel. Even worse, they botched the treatment and we had to return a few hours later, where we found ourselves at the end of a long line. Fortunately, the treatment was done properly this time. Of course, since there was no nurse with a pad, we had no idea if we were charged more for the mistreatment or the good treatment. At that moment, I couldn’t help but remember how nice it felt to be treated as a guest J

p.s. Roger is home and doing fine.