I’m looking to get a new health insurance plan for me and the boys (and then transition the wife over to once the baby comes) and I thought I’d ask you for your opinion.

I’m leaning towards a Health Savings Account, but have never had one and am curious to know what other people have / would recommend. The HSA seems like a good balance between catastrophe hedging and normal everyday medical expenses.

Feel free to fire away…

Salary.com is reporting that the average stay-at-home mom does $117,000 worth of work each year. As we approach our 8th anniversary (in 6 days) and our 4th child (in 44 days) I would have to say this amount is far too low.

It’s the first I’ve heard of it, but apparently Cyril Moulle-Berteaux over at the Wall Street Journal seems to believe that it is. I can’t tell if this is more media and realtor spin or if his analysis actually holds water. A quick google search turned up that Mr. Moulle-Berteaux ran a fund for Morgan Stanley back in 2002 and now is a hedge fund manager for Traxis Parters. Thoughts?

I have a very hard time feeling sorry for someone who took out 9 negative amortization loans in a failed attempt to capitalize on rising home prices. How is it that stupidity and gambling have recently become synonymous with investing?

Between 1996 and 2006 CEO compensation increased by 46% while worker compensation increased by 7%. In addition, there are several CEO’s, like Stanley O’Neal of Merrill Lynch, who are making millions while their companies are losing billions (O’Neal reportedly took $161 million in compensation after Lynch reported an $8 billion - that’s billion with a “B” - loss on sub-prime mortgage securities.

Maybe business schools should implement a “non greedy bastard” program into their curriculum. All I can say is disgusting.

Sounds a little bit too much like FoxNews with the alarmist title and all, but I couldn’t help myself.

Anyway, the carnage I am referring to is the continued and rapid decline of Thornburg Mortgage’s share price. They hit $1.08 during trading today after it was announced they had to cover $1.777 billion in margin calls since the first of the year (they’ve only been able to cover $1.167 billion, leaving them, currently, $610 million short.)

For those of you not acquainted with margin trading here is a quick overview and here is a more detailed explanation. By no means am I a margin or derivatives expert, but I do remember a professor from business school telling me “NEVER trade on margin. It is one of the dumbest things you can do in business.” Granted, that is only his opinion, and given mortgages consist of borrowing and lending I suppose it is largely unavoidable in this industry, however, for whatever it’s worth I will always remember his words.

I have been following Thornburg since last fall and given the current turn of events conclude the following three things:

1) They could very easily go bankrupt. Duh. Having to outlay nearly $2 billion in one quarter has the chance of leveling even the soundest of companies.

2) They could be, as their CEO said today (ok, obviously he’s going to say this), suffering from the “irrational panic that has gripped the mortgage financing market that has no basis in investment reality.” If this is true and they are indeed feeling the effects of a drastic overcorrection and they can somehow limit having to cover additional calls by either raising cash or by negotiating alternative arrangements with the lenders making the calls perhaps they can remain afloat long enough to recover. It should be noted that Thornburg’s portfolio supposedly consists of “superior AAA-/AA-rated mortgage securities” - i.e. loans to higher net worth individuals with better credit and assumedly stronger financial status than the typical debt-ridden American.

3) Another, bigger company will acquire them. This happened with Countrywide earlier this year, when Bank of America stepped in and purchased them. After the announcement Countrywide’s share value more than doubled.

There may be more scenarios but these three seem the most likely. Also, in my opinion, I believe #2 or #3 are the most likely to occur. So, a question to my professor: does investing in a company that uses margin trading as part of its business model equate to trading on margin?

(Disclaimer: I picked the same 2 scenarios for K-Mart 6 years ago and ended up getting hosed for that decision so by no means do I hold any responsibility for your investment decisions, nor does any part of this post or blog constitute investment advice. Proceed at your own risk.)