Here's something I bet you didn't know: Whenever bank, brokerage, or mutual-fund accounts remain dormant and dividend checks go uncashed or insurance policies go unclaimed, the money reverts after a few years to the state of the holder's last-known residence. The states become the legal custodians of the money until it's claimed -- which it usually isn't -- and the money can be used in the general fund or as part of the trust funds for libraries and the like.
How much unclaimed money is out there?
Numbers are hard to come by, since there's no central clearinghouse. But one of the biggest firms that specializes in locating money on behalf of states and retrieving it from companies -- Boston-based National Abandoned Property Processing Corp. -- says that last year 25 states took in $800 million.
In fact, that may be only a fraction of what the states should be getting. William Slade, president of National Abandoned, suggests that 1 percent of all securities assets -- which would come to about $30 billion in stocks, bonds, mutual-fund shares, dividends, and so forth -- are never delivered to their rightful owners.
Dormancy is defined as a lack of account activity, and the legal definition of dormancy varies from three years to 15 years, depending on the state. In Maryland, Massachusetts and Wisconsin, for example, it's five years. In California and New York, it's three. The most aggressive states find the rightful owners of 25 percent of the funds.
LOVE THOSE FORECASTERS: Can't live with 'em, can't live without 'em. Stock-market forecasters all stand an equal chance of proving right themselves, especially if they stick with a point of view long enough. That's especially true when the stock market seems to have a mind of its own, as it does now. What's so striking about the market commentary on my desk is that so much of it makes sense regardless of whether it's bullish or bearish.
Here's a sampling:
From Charles Biderman of Santa Rosa, Calif.-based Market Trim Tabs, who notes that institutional investors are almost fully invested and that the Standard & Poor's 400 index is selling at a hefty 2.8 times book value. That is its highest level since the pre-1929, pre-1987, and last year's pre-Kuwait periods. "Obviously, the little guy will prove the greater fool and bail the institutions out. Or will he? Money supply is falling, consumers are hunkering down. The stock market can't be an anomaly and go higher from here without either the economy truly picking up and/or some new source of funds showing up."
From Stan Weinstein of Fort Lauderdale, Fla.-based Professional Tape Reader: "We see no sign that this mini-bull market is over, which is the 'good news.' But there are several other realities that we have to pay close attention to. There are signs that we're getting late into this move as the tape is becoming more and more selective, so you most definitely cannot simply talk about 'the market' at this point in time."
From John Hussman of Palo Alto, Calif.-based Hussman Econometrics newsletter, who correctly predicted a rally back when most forecasters were negative or ambivalent: "Models continue to suggest that stocks will move significantly higher before the bull market ends. The major reasons are falling interest rates and a still-enormous level of uncovered short sales. There remains a high probability that the Dow will reach the 3,300 area this year. Given that yields on stocks are still fairly competitive with interest rates, the market will not be severely overvalued until Dow 3,300 is registered."
From longtime bear Jim Grant of New York-based Grant's Interest Rate Observer: "We understand that a strong market is supposed to be bullish for business activity, but we don't understand why the market is strong. We are coming around to embracing the technical position that the market is off its rocker."