Warren Buffett's Financial Rules to Live By Video

Billionaire investor Warren Buffett believes that the U.S. will emerge from the current economic recession "stronger than ever," but he said the behavior of the American consumer may be forever changed.
The billionaire shares investment advice for average Americans.

"We were on a binge before," the CEO of Berkshire Hathaway told "Good Morning America" in an exclusive interview. "I mean, we are not saving extraordinary sums now but the savings behavior has changed. ... I don't necessarily think that we will go back to behaving the way that we were two years ago."

Warren Buffett's VIDEO here!~!

The man known as the "Oracle from Omaha" because of his history of successful investments, shared his top three pieces of advice for average Americans who want to grow their savings and keep their money safe.

Number one: "If it seems too good to be true, it probably is."

Number two: "Always look at how much the other guy is making if he is trying to sell you something."

Number three: Don't go into debt.

"Stay away from leverage," he said. "Nobody ever goes broke that doesn't owe money."

The "binge," he said, was fueled largely by over-borrowing by both individuals and companies.

"The U.S. public as a whole has gotten into problems from leverage, financial institutions have gotten into problems through leverage," he said. "A long, long time ago a friend said to me about leverage, 'If you're smart you don't need it, and if you're dumb, you got no business using it.'"

At a time when many college graduates face uncertain futures and are struggling to find jobs, Buffett said he still believes that "investing in yourself is the best thing you can do. Anything that improves your own talents. And I always advise students to do that, high school students, college students and obviously investing in your children is, in some ways, investing in yourself."

No matter what happens in the economy, "if you have true talent yourself, and you have maximized your talent, you have a terrific asset."

Deutsche Bank (DB) brings ETFs to Hong Kong

After listing four exchange-traded funds in Singapore earlier this year, Deutsche Bank listed six ETFs on the Hong Kong Stock Exchange. The ETFs are branded as db x-trackers, and they offer investors a range of underlying assets. Thorsten Michalik, global head of Deutsche Bank's db x-trackers, said he expects to list 20 or more ETFs in Asia.

The six ETFs in Hong Kong offer investors a variety of underlying assets cutting across varying markets and indices. They are the MSCI USA Total Return Net (TRN) Index ETF, FTSE/Xinhua China 25 ETF, S&P CNX Nifty ETF, MSCI Korea TRN ETF, MSCI Taiwan TRN Index ETF, and FTSE Vietnam ETF.

In Singapore, the db x-trackers include the S&P 500 Short ETF, which is Asia's first "inverse" ETF. This tracks the S&P500 Index, but in the opposite direction. Investors who expect the S&P500 Index to fall can buy this ETF, as it is based on the short index which will rise when the main index falls. The other ETFs are the MSCI Taiwan TRN Index ETF, the FTSE/Xinhua China 25 ETF, and the S&P CNX Nifty ETF.

ETFs are traded on an exchange just like a stock. An ETF holds assets such as stocks or bonds and trades at around the same price as the net asset value of its underlying assets over the course of the trading day. Some ETFs track an index, while others are custom-made to track specific assets. Investors usually like ETFs for their low costs and stock-like features -- cheap, liquid beta -- although in Asia, their uses as sophisticated portfolio construction tools have yet to catch on.

Disclosure None

Roth IRA beats 401(k) Hands Down in key ways

our ability to contribute to a Roth IRA account in 2008 is determined by your income. Here's what IRS Publication 590, "Individual Retirement Arrangements," has to say about the income restrictions:

For 2008, your Roth IRA contribution limit is reduced (phased out) in the following situations.

• Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $159,000. You cannot make a Roth IRA contribution if your modified AGI is $169,000 or more.
• Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2008 and your modified AGI is at least $101,000. You cannot make a Roth IRA contribution if your modified AGI is $116,000 or more.
• Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than -0-. You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more.

The modified AGI, or MAGI, limits for the 2009 tax year will be a few thousand dollars higher than the 2008 numbers. The publication "IRS Announces Pension Plan Limitations for 2009" puts a finer point on it if you're bumping up against these MAGI limits.

Assuming you're eligible to contribute to a Roth IRA, you still have to decide if the Roth is the better choice. Both the Roth IRA and the 401(k) plan are tax-advantaged accounts. With the Roth, you contribute after-tax dollars today, and qualified distributions coming out of the account aren't subject to federal income taxes.

With a 401(k) plan, you contribute pretax dollars today, and qualified distributions out of the account are subject to federal income tax at your ordinary income rate. Being able to borrow money from the plan is an advantage to the plan versus the Roth IRA, but the loan has to be repaid if you leave your company. Otherwise, it is counted as a distribution from the plan and subject to income tax and possibly a penalty tax if it is an early distribution.

While there is no loan program available for a Roth IRA account, you contributed after-tax dollars, so no income tax is due on withdrawals of your contributions. You can withdraw your original contributions for any reason and at any time without taxes or penalties.

However, early distribution of investment earnings can be subject to income taxes and may be subject to a 10 percent penalty tax. The age of the account matters. Distributions from accounts less than 5 years old are treated differently than accounts that are more than 5 years old.

In addition, different tax rules apply if the money is withdrawn early (before age 59½) for certain reasons, such as to pay for qualified education expenses or to buy a home for the first time, or if the account holder has died or is disabled. When in doubt about the rules, work with your tax professional.

Most people in their 20s are in a lower marginal federal income tax bracket than they will be when they retire. If you expect your tax rate is lower today than it will be when you retire, contributing to a Roth IRA can make sense versus contributions to a 401(k) plan. The Bankrate article "Traditional IRA vs. Roth IRA" can help you make the right decision.

Another advantage to the Roth IRA account is that you can control where the account is held. Being able to do this lets you have some control over account fees and expenses and lets you pick a custodian that offers the types of investments you want for the account.

A lot of workers complain about the investment choices offered in their employer's 401(k) plans. You can finesse these issues by picking your custodian based on how you want the funds invested.

Disclosure I have a Roth IRA and a 401K.

Commodities move higher as risk appetite grows

Investors moved money back into commodities Thursday, sending prices for gold, copper and soybeans higher as they stepped up their willingness to take on risk.

Better-than-expected results from aluminum maker Alcoa Inc. late Wednesday are stirring hopes that the economy is indeed healing and that other companies might also report improved earnings in the coming weeks. That made beaten-down commodities, which are closely tied to the economy's health, more appealing.

Optimism about an impending recovery has waned in recent weeks as economic data, including record unemployment and a drop in consumer confidence, suggests a rebound could take longer than hoped. As a result, prices for commodities have faltered since mid-June.

A weaker dollar and modest gains in stocks — other signs of increased appetite for risk — also helped push commodity prices higher Thursday. Commodities tend to benefit when the dollar falls against other currencies because it makes them cheaper for foreign buyers.

"Today things were a little bit stable, and that drew out some of the buyers," said Edward Meir, senior commodities analyst at MF Global in New York. But, he added: "People are not as impressed with this recovery as they were several weeks ago."

There is still an abundance of evidence showing that the economy continues to struggle. Weak sales reports from retailers out Thursday and another record high in the number of people receiving jobless benefits curbed gains in stocks and energy futures.

September copper futures jumped 3.6 percent on the New York Mercantile Exchange, gaining 7.85 cents to $2.2375 a pound. Aluminum prices gained 2.1 percent.

Among precious metals, gold for August delivery added $6.90 to $916.20 an ounce, while September silver rose 8.3 cents to $12.9350 an ounce. July platinum rose $8.70 to $1,104 an ounce.

Even oil managed to eke out a small gain, reversing six straight days of losses. Investors have been sending crude prices sharply lower on fears that a delay in the economic recovery will keep demand for energy low.

Light, sweet crude for August delivery rose 27 cents to settle at $60.41 a barrel after hovering around $60 for much of the day. Oil has been steadily losing ground since early last week, when it hit an eight-month high of $73.

In other Nymex trading, heating oil fell less than a penny to settle at $1.5344 a gallon, while gasoline for August delivery rose 3.05 cents to $1.6638 a gallon.

Natural gas for August delivery rose 5.5 cents to $3.408 per 1,000 cubic feet.

Grain prices moved higher on the Chicago Board of Trade.

September wheat futures rose 5 cents to $5.2225 a bushel, while corn for September delivery gained 4.25 cents to $3.2950 a bushel.

August soybeans soared 32.5 cents to $10.4750 a bushel.

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Disclosure none

US government to pay for Swine flu vaccine campaign, My Picks Baxter International Inc.(BAX), GlaxoSmithKline plc(GSK)

The U.S. government will pay for any vaccination program against the H1N1 swine flu, and may encourage schools to help vaccinate children, Health and Human Services Secretary Kathleen Sebelius said on Thursday.

The government is also considering buying even more antiviral drugs, including more of GlaxoSmithKline's (GSK) inhaled drug Relenza and pediatric doses of Roche AG's Tamiflu, officials told a swine flu "summit" at the National Institutes of Health.

Sebelius said plans were on track for a mid-October vaccination program, and she urged states and territories to get plans in place now. It will likely run alongside the annual seasonal flu vaccine campaign and may include schools and other non-traditional sites as vaccination centers.

"At mid-October we might have as much as 100 million doses of vaccine," HHS vaccine expert Dr. Bruce Gellin told the meeting.

My Favorite Medical Instrustment and supply company is Baxter International inc. (BAX)

Baxter International Inc. develops, manufactures, and markets products for people with hemophilia, immune disorders, infectious diseases, kidney disease, trauma, and other chronic and acute medical conditions. The company operates through three segments: BioScience, Medication Delivery, and Renal.

The BioScience segment manufactures recombinant and plasma-based proteins to treat hemophilia and other bleeding disorders; plasma-based therapies to treat immune deficiencies, alpha 1-antitrypsin deficiency, burns and shock, and other chronic and acute blood-related conditions; products for regenerative medicine, such as biosurgery products and technologies used in adult stem-cell therapies; and vaccines.

The Medication Delivery segment manufactures intravenous solutions and administration sets; premixed drugs and drug-reconstitution systems; pre-filled vials and syringes for injectable drugs, intravenous nutrition products; infusion pumps; and inhalation anesthetics. This segment also offers products and services related to pharmacy compounding, drug formulation, and packaging technologies.

The Renal segment provides products to treat end-stage renal disease and irreversible kidney failure. This segment also offers solutions and other products for peritoneal dialysis, a home-based therapy and product for hemodialysis, which is conducted in a hospital or clinic. Baxter International Inc. has collaborations with HHD LLC, DEKA Products Limited Partnership, and DEKA Research and Development Corp. for the development of a home hemodialysis machine.

It markets its products to hospitals, kidney dialysis centers, nursing homes, rehabilitation centers, doctors' offices, clinical and medical research laboratories, and patients at home under physician supervision. The company was founded in 1931 and is headquartered in Deerfield, Illinois.

Disclosure I am long Both GSK and BAX in my healthcare folio. Currently I am up 17.56% year to date.