Precious Metals: Prices Down, Chances to Buy Up

The prices of many precious metals fell last week after Federal Reserve Chairman Ben Bernanke’s announcements regarding the Fed’s projected end to quantitative easing (QE) by the middle of 2014. And they are continuing their weakening trend this week, bringing ETFs and other metals-themed products down to levels that that some analysts are pointing to as good buying opportunities for investors.

The general outlook of gold and silver prices, says ETF Securities Research, should stay negative while interest-rate expectations keep rising and the U.S. dollar continues to improve. This means there are plenty of “reasons for contrarian investors to look favorably on precious metals,” wrote analysts Nitesh Shah and Nicholas Brooks in their outlook report on Friday for ETF Securities.

“At current levels gold, silver, platinum and palladium are estimated to be trading around or below their respective marginal costs of production,” they said.

“Therefore, while further downside in the short-term is possible, investors with longer-term time horizons may start to look at the recent sell-off as a longer-term accumulation opportunity,” Shan and Brooks emphasized.

Low and Lower

Gold prices dropped 7% last week, 5% for the month, 20% for three months and 18% for the past 12 months, according to Bloomberg data cited by ETF Securities. Meanwhile, silver fell even more — declining 8%, 11%, 31% and 29% during the same period.  

Prices on platinum and palladium also have moved down, but not as dramatically.

Platinum decreased 6% last week, 6% for the past month, 14% for the past three months and 6% over the last 12 months. Palladium dropped 8% last week, 9% in the past 30 days and 12% in last 90 days, but is up 9% for the 12-month period.

“As long as the Fed continues to reaffirm its commitment to reduce QE in the coming months, it seems likely that gold prices will remain weak,” the ETF Securities analysts said in their report.

But there are several factors that could change hurt U.S. growth, they add, and such a shift might prompt the Fed to step back from QE reductions. “With gold positioning so negative, this has the potential to stimulate a strong short-covering gold price move,” the analysts wrote.

Frank Holmes, CEO and chief investment officer of U.S. Global Investors, said before the Fed’s latest announcement that he had expected a 10% drop in gold prices, but he also notes the potential for a 30% move on the upside over the next 18 months.

Platinum, Palladium

The recent price drops of these metals is likely associated with a more general move by investors away from “risky” cyclical assets “in reaction to expected reduced liquidity injections by the U.S. Fed later this year,” Shah and Brooks say.

“In our view, however, to the degree that the Fed ultimately reduces its easing policy because of continued recovery of the U.S. economy," they conclude, "both platinum and palladium should benefit.”

ETF Efforts

As metals prices have moved down in the past 12 months, metal-themed ETFs — of course — have declined as well.

The SPDR Gold Shares ETF (GLD) has seen large outflows. GLD fell roughly 12% in the past 30 days, about 23.5% year to date and 19% in the last 12 months.

The iShares Silver Trust ETF (SLV) has fallen roughly 7.5% for the month, 35% year to date and 28% in the past 12 months.

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NY Times in Neutral Lane - Analyst Blog

We reaffirm our long-term Neutral recommendation on The New York Times Company (NYT). Tough economic conditions along with softness in advertising demand have been weighing upon the company's performance. Consequently, the company is trying every means to shield itself from the impact of an unstable market and has been contemplating new revenue generating avenues. Currently, The New York Times Company carries a Zacks Rank #3 (Hold) status.

Why the Reiteration?

Advertising, which remains a significant source of revenue, is largely dependent upon the global financial health. We observe that The New York Times Company's total advertising revenue slid 11.2% in the first quarter of 2013. Print advertising dipped 13.3% during the quarter. Other publishing companies such as Journal Communications, Inc. (JRN), The E.W. Scripps Company (SSP) and Gannett Co. Inc. (GCI) are also encountering similar headwinds.

Advertisers are shying away from making any upfront commitments in an economy that is showing an uneven recovery.

The New York Times Company has been adding diverse revenue streams, which include a circulation pricing model and a pay-and-read model to make it less susceptible to the economic conditions. The company is also adapting to the changing face of the multiplatform media universe, which currently includes mobile, social media networks and reader application products in its portfolio.

Despite hiccups in the economy, what still guarantees revenue generation is The New York Times Company's pricing system for NYTimes.com, which was launched on Mar 28, 2011. The company also recently announced that mobile app users will now be able to access a maximum of three articles per day from over 25 sections, blogs and slideshows, before being asked to subscribe.

The publishing industry has long been grappling with sinking advertising revenue. This comes in the wake of a longer-term secular decline as more readers choose free online news, thereby making the print! -advertising model increasingly irrelevant. To curb shrinking advertising revenue and seek new revenue avenues, the publishing companies contemplated charging readers for online content.

In an effort to offset the declining revenue and shrinking market share, publishers are scrambling to slash costs. The New York Times Company has been realigning its cost structure and streamlining its operations to increase efficiencies, and in turn the operating performance. The company is also offloading assets that bear no direct relation to its core operations.

The New York Times Company completed the sale of Regional Media Group in Jan 2012 to re-focus on its core newspapers and pay more attention to its online activities. The company divested its remaining stake (210 Class B units) in the Fenway Sports Group in May 2012. The company, in Sep 2012, completed the sale of About Group and sold its stake in Indeed.com in Oct 2012. The company also intends to sell its New England Media Group, including The Boston Globe and its allied properties.

The Dow's 4 Most Impressive Dividend Growth Stocks

Many investors seek to buy the stocks in the Dow Jones Industrials (DJINDICES: ^DJI  ) because they represent the cream of the crop of the U.S. stock market. Yet all 30 stocks in the Dow also share an important trait: they all pay dividends to their shareholders.

Still, dividend investors have gotten increasingly picky about the stocks they choose to meet their income needs, and one important element of making choices for a dividend portfolio is finding stocks that don't only pay healthy dividends now but will also continue boost their payouts in future years. That's why this article highlights four stocks that have made massive increases in their dividend yields since the market last hit record highs back at the end of 2007. Let's look at those four stocks.

Hewlett-Packard (NYSE: HPQ  )
As of the end of 2007, HP stock had a dividend yield of just 0.6%, but in the years since then, the yield has more than tripled to its current level of 2.2%. What makes that yield all the more impressive is that the stock has bounced sharply this year, gaining more than 80% and therefore cutting the yield almost in half from the 3.7% level it boasted at the beginning of 2013. HP had paid the exact same quarterly dividend for more than a decade until it made a 50% boost in its payout in mid-2011, recognizing the value of returning more cash to shareholders. Even through tough times last year in the midst of multiple failures in past efforts at restructuring, HP kept paying dividends, and now that the stock appears firmly on the comeback trail, investors increasingly believe that focusing on more profitable business lines could produce even greater dividend growth.

Intel (NASDAQ: INTC  )
Chip giant Intel has gone from a typical tech stock to a Dow dividend giant, with its yield having risen from 1.7% at the end of 2007 to 3.9% today. The company has doubled its dividend over that period of time, but the other part of the yield equation hasn't been as kind to investors, as Intel's share price has actually fallen over that period. Intel had the financial strength to withstand the market meltdown, but its ongoing struggles to adapt to the mobile revolution haven't resulted in the growth that investors would prefer to see. Until the company can capitalize more fully on newer technology, Intel's status as a mature tech company with more prospects for dividend income than future growth could hold the stock back.

ExxonMobil (NYSE: XOM  )
The oil giant's dividend has risen from just 1.5% in 2007 to 2.7% today, with an 80% rise in per-share dividends accounting for pretty much the entire increase in its yield. Energy prices remain reasonably strong, with oil still trading at triple-digit levels despite huge production gains from unconventional drilling practices. Yet despite the powerful earnings that the favorable energy environment has produced, ExxonMobil still struggles with the need to replace declining production from older wells with new finds that are large enough to make a significant different in its total business. Combined with share buybacks, Exxon returns more capital to shareholders than any other company, and that's likely to continue as long as Exxon doesn't find the need to make a massive strategic acquisition that uses up its available ash.

Microsoft (NASDAQ: MSFT  )
Microsoft has boosted its dividend yield from 1.2% in 2007 to 2.9% today, with its quarterly dividend having more than doubled. Like Intel, Microsoft has seen struggles in producing sizable growth from its core business in a world in which PC demand has started to decline dramatically. Yet by returning more capital to shareholders, Microsoft reminds investors that its legacy businesses still generate huge amounts of cash, and even if they're in decline, they'll likely keep rewarding dividend recipients for years to come. If the company's planned restructuring can reinvigorate its product innovation, moreover, Microsoft could finally reawaken growth to go with its solid dividends.

Accept only the best
The best stocks offer not only good yields but improving payouts. By focusing on the stocks that will give you favorable dividend characteristics, you'll reduce your chances of being disappointed by the dividend stocks you own.

Dividend stocks can make you rich. It's as simple as that. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of the only nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

Should I Buy Tui Travel?

LONDON -- Tui Travel's (LSE: TT  ) share price has been flying lately, up 33% over the past six months. Over 12 months, it has soared a gravity-defying 120%, compared to just 25% for the FTSE 100. Have I left it too late to hop on board?

Investors in Tui Travel, which owns Thomson and First Choice, have had plenty of fun in the sun but, like any holiday romance, it is difficult to sustain in the longer term. Yet the world's largest tour operator has staying power, grabbing profitable market share and cashing in on strong demand from sun-hungry, recession-sick Brits and Nordics. Tui's full-year underlying operating profit growth is on course to hit 10%, according to its recent interim six-monthly results.

Fun in the sun
Tour operators typically lose money in the winter, when seasonal bookings are sharply down, but Tui has been trimming its losses. Operating loss fell 43 million pounds to 274 million pounds, a drop of 14%. Pre-tax losses shrunk by 53 million pounds to 404 million pounds, despite a 1% drop in first-quarter revenue to 5.39 billion pounds.

The annual summer holiday is one tradition most of us still like to observe. Summer 2013 bookings are up 15% in the U.K., 11% in the Nordics, and 9% in Germany, offsetting a slowdown in France. That's the benefit of diversification. The Internet has whacked many a business model, but package holidays could be a surprise exception. Maybe we're getting a bit tired of DIY holidays, and want somebody to do the legwork for us, at an all-inclusive price. Tui has also fought back through its strategy of offering "unique holidays" unavailable elsewhere.

Tui or not Tui?
Management is confident, hiking the interim dividend 10% to 3.75 pence. That leaves Tui yielding 3.3%, close to the FTSE 100 average and nicely covered 2.2 times. This is forecast to rise to 3.9% by September 2014. Despite the recent share price surge, at 13.9 times earnings this stock isn't as pricey as I would have expected (it has largely been making up lost ground after a troubled 2010 and 2011). Earnings per share (EPS) growth of 11% in the 12 months to September and 10% to September 2014 suggest Tui could still have a little further to travel.

If you want the sun to shine on your retirement, then don't miss our special report "5 Shares to Retire On." This free report by Motley Fool share analysts names five FTSE 100 favorites to secure your retirement. To find out more, download this report now. It won't cost you a penny, so click here.

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Millennials: Beware of Financial Advice From Your Parents

Getty Images From birth, we're raised thinking mommy and daddy know best. They have our best interests in mind when they scare away tattooed teenage boys, keep the liquor under lock and key, and set our curfews earlier than those of all our other friends. Unfortunately, when it comes to money, mommy and daddy might be leading you astray. Financial literacy rates in the Millennial generation are abysmal. This year the Treasury Department and Department of Education tested the financial literacy of 84,000 high schoolers, who scored an average of 69 percent. With little to no financial literacy taught in our education system, children have no choice but to learn from dear old Mom and Dad. But if Mom and Dad were never taught -- or never bothered to learn -- how to appropriately handle money, they sure aren't the ones who should be giving financial advice. If you've ever heard your parents say, "Don't get a credit card," they were wrong. Credit cards are one of the easiest ways to build your credit score. Granted, establishing new credit only makes up 10 percent of your score, but if you aren't paying off loans yet, it might be the only way for you to establish a line of credit. Length of credit history makes up 15 percent of your score, so the longer you've had a "healthy" history, the higher your score will typically be. Parents are often reluctant to give their college-age children access to plastic, but if you know how to treat your card right, it'll pay off. When you graduate and start looking for an apartment, a respectable credit score is important to your landlord, while a lack of one can prevent you from signing a lease. If you've ever heard your parents say, "Keep a monthly balance on your credit card," they were wrong. Somehow, parents heard a rumor that keeping a monthly balance on your credit card will help your credit score. They spout some nonsense about how paying the minimum shows responsibility and increases your score. False. Carrying a balance does nothing to improve your score and instead costs you more money because you're accumulating interest on the balance. Instead, pay off your credit card in full each month (which means not charging more to the card than you know you can afford). If you've ever heard your parents say, "X,Y or Z college is worth the student loan debt," they were wrong. Millennials are drowning in student loan debt. As a generation, our debt is so horrific it's predicted to delay our retirement age until 73. For many millennials, it's too late to turn back now; the debt has already been accumulated. The only hope is to diligently, or quickly, pay down debt, and simultaneously start figuring out how to save for retirement from the moment you get your first paycheck. The other option is to start a side hustle and increase your influx of cash. For the younger millennials and Generation Z, there's still hope. When considering college, apply to every scholarship you qualify for. Sometimes your GPA doesn't matter as much as your height or your ability to call ducks. It's a good idea to set your pride aside during your college-decision-making process and really evaluate whether the ROI of your major at X, Y or Z school is worth tens of thousands of dollars in debt. If not, consider state schools, smaller liberal-arts colleges, or simply choosing the college that offered you the best financial package. If you've ever heard your parents say, "Don't invest in the stock market; it's just gambling," they were wrong. Yes, 2008 was a tough year, and the market took a tumble. Boomers lost money and some saw their retirement accounts take a hit. Unfortunately, this led to the millennial generation developing a great mistrust of the stock market. While we might be reluctant to get in bed with the stock market, it's certainly still willing to love us. The greatest advantage for an investor is time, and time is exactly what 20- to 30-year-olds possess. If you're not quite ready for index funds, mutual funds or buying individual stocks, you should at least contribute to your company-matched 401(k)s or open a Roth or Traditional IRA. If you've ever heard your parents say, "Have babies," they were wrong. Starting a family is certainly a personal choice, but not one you should be making based on parental pressure. Raising a child is a tremendous financial commitment. In 2012, it cost middle-income parents $286,860 to raise a child from birth to age 17. If you're willing to pay for college in full, then you can tack on an extra $100,000 or more. For many millennials stuck in the red, starting a family could complicate an already stressful financial situation. Parents mean well, but sometimes their advice comes from a negative personal experience or a lack of knowledge. Instead of always trusting their financial advice, be sure to educate yourself and check against credible sources.

A Few Stocks Bucking the Downward Slide

This morning, investors received two key economic data points and a number of earnings reports, which ultimately caused the markets to fall. The Dow Jones Industrial Average (DJINDICES: ^DJI  ) closed the day down 81 points, or 0.56%, and now sits at 14,537, which is a far cry from the 15,000 some investors were hoping to see this week. The S&P 500 closed the day down 10 points, or 0.67%, while the Nasdaq plummeted 1.2% during today's trading session.

One of the economic reports was the Labor Department's initial jobless claims number, which rose last week by 4,000, to 352,000, while economists were expecting only 346,000. The other data point came from the Commerce Department, and focused on housing starts during the month of March. On a seasonally adjusted basis, analysts were expecting 917,000 starts, but the number actually came in at 1.04 million. 

While one number indicates the economy is growing stronger, the other point gives investors a slightly less optimistic view. But, regardless of what economic data is telling investors, what truly matters is earnings, and today, a few of the Dow's components rose higher on the back of good results.

Shares of American Express (NYSE: AXP  ) were higher by 1.42% after the company released strong earnings last night after the closing bell. The company reported that net income rose 2% and hit $1.15 per share, while analysts were expecting $1.12 per share. But, while the company beat expectations on the bottom line, American Express missed on the top line when they reported $7.88 billion, which represented 4% growth from the first quarter last year;l analysts wanted to see $8.03 billion on the top line. The company also reported that card member spending grew 7%, which represents the fourth consecutive quarter of growth. 

Telecommunications giant Verizon (NYSE: VZ  )  saw its shares soaring higher today after the company announced earnings this morning. The company also missed on the top line, but beat on the bottom. Revenue was expected to hit $29.6 billion, but came in at $29.2 billion, while Verizon's earnings per share were estimated at $0.66, but hit $0.68 per share. Although revenue missed, it did come in 4% higher than last year. 

Intel (NASDAQ: INTC  ) shareholders also had a good day, as shares rose 1.41%. The rise was likely due to comments made by the company's competitor Advanced Micro Devices (NYSE: AMD  ) . AMD is planning to get as much as 20% of its revenue outside PC chip sales by the fourth quarter, which could be great news for Intel. If AMD finds success in other areas, it may gradually move away from PCs, opening up more opportunity up for Intel. 

When it comes to dominating markets, it doesn't get much better than Intel's position in the PC microprocessor arena. However, that market is maturing, and Intel finds itself in a precarious situation longer term if it doesn't find new avenues for growth. In this premium research report on Intel, our analyst runs through all of the key topics investors should understand about the chip giant. Click here now to learn more.

Buffett's Market Indicator Flashes Red, Prepare To Sell

With each passing month, it's becoming evident that the current bull market has slowed from a gallop to a trot.

The S&P 500, which rose 29% in 2013, will likely trail such a gain this year, as it is up only 7% in 2014 as of September 15. And by one key measure, the bulls advance may cease altogether, potentially resulting in a market reversal.

Make no mistake, the market has been in rally mode for more than five years in large part due to the Fed's easing hand, which is fueling ultra-low interest rates and ample liquidity for stock buying. Yet it's always wise to keep an eye on traditional market metrics, in case the market starts to become fully disconnected from the fundamentals.

[Related -PBoC joins other major central banks with unconventional monetary policy action]

Each investor can focus on their own sense of fair value. For example:

-- Some investors like to compare the dividend yield on the S&P 500 to federal fund rates. The current dividend yield stands at around 2%, higher than short-term interest rates. Still an eventual upward move in short rates will pressure this valuation gauge.

-- Other investors like to see how stocks are trading in relation to their private market value (i.e. what they would likely fetch in a buyout). Private equity historically acquires mature business at 4-to-6 times trailing cash flow, and growth businesses at a somewhat higher multiple. Fully 83% of the companies in the S&P 500 are trading for more than eight times trailing cash flow.

[Related -A Buyback Boost?]

-- Other investors like to focus on EPS growth. Per share profits have been enhanced in recent years by massive share buybacks -- a trend that may not last. If buyback activity cools, underlying net profit growth will come into greater focus. Many companies in the S&P 500 are seeing profit growth slow to less than 10% as the low-hanging fruit of streamlining efforts disappear.

Warren Buffett has an easier way to gauge the valuation of stocks. He thinks that the combined value of all stocks -- as measured by the Wilshire 5000 Total Market Index -- should be worth less than the Gross Domestic Product (GDP) of the U.S. economy. And this ratio has typically generated a sell signal whenever it gets out of whack. It happened in 2000 and again in 2007, and though the market marched higher after crossing that threshold, the 12-to-18 month outcome was fairly bleak.

Unfortunately, we're back into the danger zone. The stock market's total value surpassed GDP in March 2013, and is already beyond the point it stood in early 2008, just before the last major market pullback. As this chart from financial blogger Doug Short shows, the market is now more than 15% overvalued, at least according to Buffett's gauge. This gauge actually rose above 135% in 2000, and the dot-com melt up turned out to be a painful experience for most investors.

To be sure, "this time is different" is a mantra that you'll hear on Wall Street trading desks. These traders suggest that corporate profit margins have never been higher and companies now deserve higher valuations.

Here's the problem with that logic: Profit margins often peak in the early stages of an economic recovery as companies skimp on spending. Indeed work forces remain lean and capital spending has been depressed, but as an economy starts to strengthen, many companies amp up their rate of spending and profit margins return back to Earth.

Still, investors can remain bullish as long as per share profit growth remains robust. Will that be the case? It's hard to know how the U.S. economy will be faring in 2016 and beyond as China, Europe and our own economic cycle remain as major question marks. But we can at least gauge EPS trends before then. According to Factset Research, the projected earnings growth rate is 7.3% for the S&P 500, rising to 11.5% in 2015. Double-digit profit growth will likely only happen if the U.S. economy grows at a 3% pace next year.

S&P 500 Profit Growth & P/E

Obama wants more financial reform

  Obama: 3 ways to help working families NEW YORK (CNNMoney) The ink is barely dry on the post-crisis financial reforms, but President Obama says more is needed.

He said big banks need additional restraints from making bets that leave taxpayers "holding the bag."

"That's going to require some further reforms. That's going to require us looking at additional steps that we can take," Obama said in an interview with the public radio program "Marketplace."

He suggested some would come from Washington and other changes require "restructuring the banks themselves -- how they work internally."

"We have to continue to see how can we re-balance the economy sensibly, so that we have a banking system that is doing what it is supposed to be doing to grow the real economy, but not a situation in which we continue to see a lot of these banks take big risks because the profit incentive and the bonus incentive is there for them," he said.

Meanwhile on Wall Street, many big banks are making their own internal changes, shutting down the profitable but particularly risky speculative trading units.

And regulators have been slow to flesh out how the industry reforms Congress passed in 2010 will work. Just over half of the nearly 400 federal rules required under Dodd-Frank have been finalized, and nearly a quarter haven't even been proposed, a key early step in the rulemaking process, according to Davis Polk, a financial industry law firm.

But federal prosecutors have stepped up their tactics against misbehaving banks, settling charges with guilty pleas for the first time in decades. In May, Credit Suisse (CS) pleaded guilty to tax evasion-related charges, and this week, the French bank BNP Paribas (BNPQF) entered guilty pleas related to sanction violations and agreed to pay nearly $9 billion in penalties.

It seems unlikely additional financial industry reforms would move smoothly through divided Washington, and the majority of Obama's efforts on the economy have focused on wages and college costs. He has pledged what he calls a pen-and-phone approach to accomplish his priorities through executive orders and the bully pulpit.

Chrysler reports quarterly loss on buyout charges

Chrysler Group, now wholly owned by Fiat, reported on Monday a first-quarter net loss $690 million after about $1.2 billion in charges related to the January buyout of the United Auto Workers 41.5% stake in the company.

Excluding the buyout items, the company had net incomes of $486 million, up from $166 million in the quarter a year ago.

Net revenue for Chrysler Group in the quarter was $19 billion, up 23% from a year ago, the company reported. Free cash flow was $919 million, up from $449 million a year ago, and Chrysler had $12.4 billion in cash as of March 31.

Global vehicle shipments were 668,000, up 16%, and sales were 621,000, up 10%. U..S. retail sales were up 19% in the quarter and U.S. market share was 12.5%, up from 11.4% a year ago, driven primarily by sales growth for Ram trucks and the Jeep brand..

The UAW health care trust got a stake in the company in exchange for taking over retiree health care liability as part of the government sponsored bankruptcy reorganization in 2009. The $4.35 billion deal with the union and Chrysler and Fiat allowed Fiat to take full ownership of Chrysler.

The two are being combined into Fiat Chrysler Automobile, a new company that says it will be formed and begin trading in the U.S. by the end of this year. Fiat shareholders will get shares in the new company under a plan due to be voted on by Fiat shareholders this summer.

The items related to the UAW deal were a $504 million non-cash loss related to the prepayment of a UAW trust note and a $672 million charge for buying the shares held by the union.

Fiat last week reported a first-quarter loss of 319 million euros ($444 million), that also included charges related to the UAW deal.

Guaranteed Income: How Not to Need a McJob in Retirement

Jim West/Alamy Last week, we talked about investing, the second circle of wealth in my series of "Six Absolute Necessities for Acquiring Long-Term Wealth." The third is guaranteed income. When I study people with successful retirements, filled with abundance and options, almost all have things in common: They carry very little, if any, personal debt. They have stable, secure income from multiple sources that they can set their watch by every month Starting about 10 years before they retire, they begin shifting their assets from riskier investments to low- or no-risk income assets. A mortgage is generally the biggest debt most of us have. Many argue that you should never pay off your house because the equity you put into it is tied up and not making you money. They might recommend borrowing as much as you can now because interest rates are low. I say you can have the best of both worlds. First, pay off your mortgage before you retire. By adding small amounts directed to your principle every month, you will take months, even years off your payoff date. When your house is paid off, get the biggest equity line of credit you can. This way, if you see an attractive investment opportunity, you can put your equity to use, and if you don't, you have removed the pressure of a big mortgage payment in retirement. If you can pay off your mortgage while you are working, why not now shift that payment over to a solid savings or income product? This could work out to tens of thousands of extra dollars producing monthly income for when you retire. An abundant retirement is about strong positive cash flow that you can count on for years to come. Do you have any idea how much money you need to retire every month? Do you know where you can get that income from? Do you have enough money for home health care or long-term care? Are you protected from big market downturns during your retirement years? How much will inflation eat into that monthly income needed? Can You Answer These Questions? All these questions must be part of an income plan. We calculate these for clients all over the country. First, know how much income you and your spouse will receive from Social Security when you retire. You can get an estimate from the Social Security Administration. If you believe that number is at risk because of issues with Social Security, you better start putting more away and growing it safely. If you need $5,000 per month to retire and the Social Security for you and your spouse is only $3,500, then you have a $1,500 shortfall. Do you have a pension? How much will that be when you begin to draw it? Do you have a 401(k) or Individual Retirement Account? How long could that account last if you need to draw $1,500 a month -- $18,000 in a year? Will you have to pay taxes on what you take out? If you have a 401(k) or traditional IRA, the answer is yes. If you lose 50 percent of your capital to a bear market, how long will you be able to get $18,000 per year? As you get to be in what we call the "retirement danger zone," which is 10 years before your projected retirement, you need to start shifting assets away from market risk and over to guaranteed products. A solid fixed indexed annuity with a long-term income rider might be a very good call. I wrote an article about the different types of annuities and how to purchase one that fits your needs. A lifetime income rider (state and product variations exist) will guarantee that you have a certain amount of income (depending on how much you have in your annuity and at what age you start withdrawing) for you and your spouse's life. If you live to be very old, your normal retirement funds might run out, but a lifetime income rider guarantees that income stream regardless of what happens to the underlying cash in the account. Also if you have five to 10 years, you have time for that income rider to grow. Many income riders offer 6 percent and more guaranteed growth every year. When you purchase a $200,000 annuity, many companies might offer a 10 percent bonus on your initial purchase price so your starting amount would be $220,000. When you add compound growth at 6 percent over 10 years, your income rider would top $400,000. Then you would start to draw your lifetime income at 6 percent of the $400,000, giving you $24,000 a year income for you and your spouse's life. Presto! You have filled your income gap. If you have the resources to purchase another annuity, you might get one with a cost of living clause to hedge against inflation.

SEC's Mary Jo White's top priority: uniform fiduciary standard

Bloomberg News

Securities and Exchange Commission Chairman Mary Jo White said Friday that she is pushing the commission to make a decision on whether to propose a regulation that would raise investment advice standards for brokers.

"We will intensify our consideration of the question of the role and duties of investment advisers and broker-dealers, with the goal of enhancing investor protection," Ms. White said at the SEC Speaks conference in Washington sponsored by the Practising Law Institute.

In a meeting with reporters after her remarks, Ms. White said that she wants the five SEC commissioners to come to a conclusion on whether to implement a uniform fiduciary standard for investment advice and to decide whether to harmonize regulations that govern investment advisers and brokers.

The Dodd-Frank financial reform law gave the SEC the authority to promulgate a regulation that would require that brokers who provide retail investment advice must always act in the best interests of a client — the standard that investment advisers already meet. Brokers are held to a suitability standard when they sell investment products.

The SEC is conducting a cost-benefit analysis of a potential uniform-fiduciary-duty rule but has not indicated whether it will advance a proposal.

"The threshold issue is whether to proceed and what to proceed with, if so," Ms. White told reporters after her speech. "It's a primary, immediate focus."

Ms. White declined to reveal her own position on a uniform fiduciary standard.

"I'm not going to comment on that here," Ms. White said. "I have said, and I firmly believe, that it's a very high priority to make that decision, and it's something I have given a high priority to within the agency."

Three of the five SEC commissioners would have to support a rule proposal for it to move forward for public comment.

In her speech, Ms. White said that the SEC also will increase its oversight of broker-dealers "with initiatives that will strengthen and enhance their capital and liquidity, as well as providing more robust protections and safeguards for customer assets."

This year, the SEC also will step up its monitoring of asset management companies for potential risks they pose to the financial markets.

"I asked the [Division of Investment Management] staff for an action plan to enhance our asset manager risk management oversight program," Ms. White said in her speech. "Among the initiatives under near-term consideration are expanded stress testing, more-robust data reporting, and increased oversight of the largest asset management firms. To be an effective 21st-century regulator, the SEC is using 21st- century tools to address the range of 21st-century risks.”

The Long-Term Costs of the RadioShack Super Bowl Ad

RadioShack Corp. (NYSE: RSH) is actually ticking up on the admission by the company that it has to shed its very outdated image. The admission was a Super Bowl commercial, and RadioShack was not even among our own six stocks looking to benefit from the Super Bowl. What investors and outsiders alike really need to consider is what the ultimate cost will be in capital spending to live up to its image rebranding.

The commercial showed nothing but 1980s entertainment icons being hoisted out, only to have the new concept store unveiled. The ad itself was actually one minute, and spots sold for roughly $4 million per 30-second slot.

RadioShack is still losing money, but the company had $316 million in cash at the end of September. It also had almost $500 million in direct long-term debt as of that time. Where things get interesting is that RadioShack announced in December that it was closing on an $835 million financing pact with GE Capital and two others. That capital is being used to refinance existing debt and was represented as offering an additional $200 million or so in liquidity.

The USA Today Ad Meter showed an average 7.0 vote for the company. That implies that maybe the new store concept will do better, or at least have more eye appeal, hopefully. If RadioShack had 4,300 company-operated stores in America alone, what is a fair cost of fulfilling the new image of that commercial? Assuming RadioShack closes down another 300 of its stores to a raw 4,000, how does one calculate the cost per store on a capital spending basis? Here is a total based on various per store costs, including new point of sales, inventory tracking, buildouts and more:

$500,000 per store is probably too high, but that is $2 billion. $250,000 per store is hopefully too high — that is still $1 billion. $100,000 per store may be close, maybe, and that is $400 million. Even $50,000 per store is $200 million.

Perhaps the biggest problem is that RadioShack’s liquidity could be consumed entirely in this effort, when you consider that it is expected to keep losing money. The company’s stock also continues to remain in the doldrums. At $2.40, the 52-week trading range is $2.02 to $4.36. And the market cap is a mere $240 million.

It seems hard to imagine that investors would bid this up over a commercial, but the stock was up more than 5% at $2.55 in early Monday trading. RadioShack is just lucky that it had its ad early in the first half, because the interest in the game started to fade even before the end of the first half.

What Does GNC's Renewed Agreement With Rite Aid Imply About Its Future?

Have you ever heard in business that it's not what you know, it's who you know that counts? The saying implies that relationships are not just important in business, but imperative if you want any hope of success. One company that realized this early on was GNC Holdings (NYSE: GNC  ) , a provider of nutritional supplements based out of Pittsburgh.

Throughout the past several years, the company has struck deals with Rite Aid (NYSE: RAD  ) , PetSmart, and Sam's Club, a segment of Wal-Mart. The company's most recent agreement involved it renewing its relationship with Rite Aid through 2019 and adding GNC locations to at least 300 additional Rite Aid stores. Using these relationships, GNC strives to increase its market share, but as I chronicled in an earlier article, it has to accept some downsides. It is also provided some very attractive benefits.

Revenue is impaired
Perhaps the most interesting of GNC relationship's is with Rite Aid. According to an agreement between these two companies, GNC has been able to set up a store-within-a-store model inside of various Rite Aid locations. Such a decision between two companies to join forces in this way may appear to be odd, but the model has worked out so well that other retailers like J.C. Penney (NYSE: JCP  ) have adopted it.

In an effort to grow its business, J.C. Penney began implementing a store-within-a-store setup as early as 2007. However, the company began experiencing financial strain after its former CEO, Mike Ullman, retired and Ron Johnson, a former executive at Apple, took his place. Johnson, who believed that coupons were bad for customers and that instead J.C. Penney should abolish them and adopt a policy of everyday low prices, was also responsible for pushing the store-within-a-store initiative with Martha Stewart Living as its flagship test subject.

After seeing revenue decline significantly and a net gain transform into a net loss, Johnson was ousted and Ullman was brought back in with the goal of turning the business around. Recognizing the appeal of the store-within-a-store model, Ullman elected to continue and expand the concept by bringing in big names like Disney. Since then, the store-within-a-store design has been a cornerstone for J.C. Penney's attempted turnaround.

By the end of GNC's 2012 fiscal year, it had this kind of setup inside 2,181 Rite Aid locations. To put this in perspective, 26.8% of GNC's locations were located inside of Rite Aid stores, far from being insignificant. Despite this, total revenue from these locations only accounted for 2.5% (or $60.75 million) of the company's consolidated revenue for the year.

On a per-store basis, this implies revenue of $27,854. In contrast, revenue for the stand-alone retail and franchise locations averaged $367,538 per year, which indicates there is a lot more value to be had by foregoing said partnerships.

Unlike the company's agreement with Rite Aid, its relationships with Sam's Club and PetSmart don't involve a store-within-a-store design. Because of this, it's impossible to break down revenue the company receives from each entity, but we can conclude that it generated combined revenue of $176.1 million from them in 2012 and $158.8 million in 2011.

This means that while revenue only grew 1.1% for its Rite Aid locations between 2011 and 2012, it rose 10.9% in the company's other business alliances. Growth like this is nothing to scoff at, but it fell short of the 17.3% growth the company experienced on a consolidated basis.

But revenue isn't all that matters!
Looking only at revenue, we might say that GNC would be better off not having its stores located within Rite Aid and possibly not even through its connections with Wal-Mart and PetSmart. This would be especially true if the company's margins from these relationships were smaller than its retail and franchise segments. If this were the case, management would be wise to abandon these endeavors and instead refocus their efforts on adding to their retail or franchise locations.

Interestingly, this isn't the case. Although growth is lower than it is in the company's retail and franchise operations, margins are considerably higher. In 2012, the operating margin for this segment came out to an impressive 40.3%. This marks an annual increase from the 37.7% operating margin earned in 2010 and has been attributed to higher wholesale margins (aka economies of scale) and greater proprietary shipments.

These results are far higher than the 19.4% operating margin of the company's retail segment and slightly higher than its franchise segment, which earned 33.4% last year. Admittedly, these operating segments have both experienced improvements over the past three years, but still have some ways to go before matching the company's manufacturing/wholesale segment.

Foolish takeaway
Based on the data provided by GNC, the company is trying to take a multifaceted approach to improving its business. By focusing on its retail or franchise operations, management could ensure greater prospects but would be forgoing some considerable margins. For this reason alone, the company is smart in focusing most of its time and energy growing its other segments in the hopes that as its business becomes larger, management's ability to engage in these lucrative contracts will grow as well.

Ideally, management and shareholders alike are probably hoping to move more toward such licensing agreements down the road, but unless the company wants to cut revenue significantly, this isn't likely anytime soon. Rather, it would be reasonable to see licensing agreements with third parties grow as a percentage of revenue over time, especially as franchise opportunities eventually slow their growth in light of more market saturation.

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24/7 Wall St.: The most dangerous holidays

AAA estimates that during this Christmas and New Year's season, nearly 95 million Americans will hit the road, traveling long distances to visit friends and family. Unfortunately, during the end-of-year holiday travel period, nearly 27,900 Americans will be seriously injured in auto accidents, and more than 250 will die.

The National Safety Council (NSC) has released reports estimating the number of traffic accidents and fatalities that occur on major holidays, including Christmas, New Year's, Thanksgiving, Memorial Day, Labor Day, and Independence Day. According to the NSC, the deadliest holiday this year will likely be the Fourth of July, which saw an estimated 540 motorists die during the travel period, which spans roughly four days. 24/7 Wall St. reviewed the NSC's most recent estimates of motor vehicle accidents and casualties for the six big holidays.

Ken Kolosh, manager of statistics at the NSC, explained that while travel during all these major holidays increases, the number of fatalities doesn't always jump significantly. "The New Year's holiday generally results in a significant increase in the number of fatalities when looking at a comparable period in same month," Kolosh noted. On the other hand, he added that in the case of Christmas, there isn't a significant increase.

One major reason for the difference may be alcohol consumption. A separate report released by the Council this month shows that holidays like New Year's Day and Independence Day are more likely to see people drink and drive. During the New Year's period, between 2007 and 2011, an estimated 42% of traffic fatalities were the result of drinking and driving. On Christmas, just 35% of accidents were the result of drinking and driving, less than any of the major six holidays.

As might be expected, poor weather is regularly a factor in the accidents and deaths on the road. However, according to Kolosh, the actual effects of a severe blizzard on a major holiday are not what you might expect. "It's a little bi! t counterintuitive, but good weather in winter months actually results in more fatalities," he said. The reason for this, he explained, is people are less likely to travel more than absolutely necessary in bad weather.

For each holiday, the number of accidents fluctuates each year. In 2012, there were more than 350 fatalities during the Christmas travel period. This year, the National Safety Council estimates there will be just 105. The figure is lower largely because Christmas falls in the middle of the week and the travel period isn't spread out over a weekend.

Traffic accidents and deaths during a holiday are also influenced by how many people actually travel that year. According to Kolosh, the strength of the economy influences the amount of driving Americans do. "Macroeconomic issues such as recessions greatly impact fatalities on the road," he said. "Recessions actually tend to save lives on the road. We've reached some really historic lows during the last recession."

Between 2003 and 2008, years when U.S. unemployment was relatively low, there were at least 370 traffic fatalities during the Christmas season. Between 2009 and 2011, when U.S. unemployment was at its worst, fatalities averaged around 250 per Christmas travel period.

To identify the most dangerous holidays, 24/7 Wall St. reviewed the National Safety Council's estimates for the six holidays it measures of traffic accidents and fatalities occurring during that holiday travel period. All figures for 2013 and 2014 are estimates from the NSF. Travel periods change year-to-year, depending on which day of the week the holiday occurs. The NSC also estimated the proportion of traffic fatalities caused by alcohol consumption. Those figures are based 2007-2011 averages.

These are the most dangerous holidays

6. Christmas Day

> Estimated fatalities: 105
> Deaths prevented by seatbelts: 38

According to AAA estimates, holiday travel at Christmas will increase this holiday season for the fifth! year in ! a row. About 30% of Americans are expected to travel during this time. From the afternoon of Christmas Eve through Christmas Day, the NSC estimates there will be 105 deaths and an additional 11,200 severe injuries in traffic accidents. This is significantly lower than in previous years. Last year, there were 351 fatalities. This decline is largely because Christmas falls in the middle of the week and the traveling period is significantly shorter than usual. The worst Christmas in recent history was in 2001, when 575 people were killed.

5. New Year's Day

> Estimated fatalities: 156
> Deaths prevented by seatbelts: 57

People are much more likely to drink and drive around January 1 than during any other major holiday. Nearly half of all 286 traffic fatalities during the New Year's travel period in 2010 were alcohol related. Between 2007 and 2011, alcohol accounted for 42% of all traffic deaths during the holiday. By comparison, during Christmas, alcohol was a factor in just 35% of fatalities. The 2010 New Year's period represented a low point for fatalities, at just 286. Traffic deaths ticked up to 348 by 2012. However, since the upcoming New Year's day — like Christmas — falls in the middle of the week, the total travel period for the holiday is shorter, the estimated 156 fatalities would be the lowest in some time. Safety is another reason the number of fatalities is projected to be so low, as the NSC estimates that 57 lives will saved by seat belts during the holiday.

MORE: Top 10 cars with the best resale value

4. Labor Day

> Estimated fatalities: 394
> Deaths prevented by seatbelts: 143

According to a AAA estimate, roughly 34.1 million Americans traveled at least 50 miles over the long Labor Day weekend this year. During the holiday period, which ran from Friday evening through midnight Monday, there were nearly 400 traffic-related deaths and more than 42,000 serious injuries, according to the NSC. If this year's estimate is accurate, th! ere will ! not have been more than 400 driving fatalities during Labor Day for five straight years. Between 1995 and 2008, there were at least 450 deaths every year.

3. Thanksgiving Day

> Estimated fatalities: 436
> Deaths prevented by seatbelts: 158

Over the six-year period between 2006 and 2011, traffic deaths around Thanksgiving accounted for nearly 15% of all vehicle-related fatalities in November. Between 2001 and 2007, driving fatalities during the holiday were in excess of 500 each year, peaking at 623 in 2006. Over the last five years, however, deaths have not exceeded 500. In 2011, just 375 people died on the road over the holiday, the fewest deaths since at least 1995. This year, the NSC estimates deaths rose to 436, with an additional 46,600 nonfatal injuries, which include all unintentional injuries that require medical consultation, over the travel period running from Wednesday evening through Sunday.

MORE: Eight states with the highest minimum wages

2. Memorial Day

> Estimated fatalities: 407
> Deaths prevented by seatbelts: n/a

Fireworks over the U.S. Capitol and Washington Monument on July 4, 2013.(Photo: Paul J. Richards, AFP/Getty Images)

Memorial Day weekend — the first major holiday weekend of the year and widely considered the start of summer — has 13.1% more traffic deaths, on average, than a typical non-holiday weekend. The Monday of the four-day weekend, Memorial Day itself, has 32% more fatalities than the preceding three days, according to a study on holiday fatalities by Arnold and Cerrelli. The reason is likely the increased travel during the last long weekend day. The NSC estimate of 407 traffic deaths during the 2013 Memorial Day weekend is slightly higher than the 367 deaths du! ring the ! 2012 holiday weekend. Since 2010, driving deaths during the holiday have remained below 400. Before 2010, the last time there were less than 400 deaths was 1998.

1. Independence Day

> Estimated fatalities: 540
> Deaths prevented by seatbelts: 196

The NSC estimates that the Fourth of July will go down as the most dangerous holiday for travelers in 2013 with 540 deaths and nearly 58,000 serious injuries. Drinking and driving played a major role in this. According to data from the National Highway Traffic Safety Administration, between 2007 and 2011, alcohol accounted for 61 traffic fatalities per day over the Independence Day travel period, more than any other major holiday. Between 2007 and 2008, motor vehicle deaths around Independence Day more than doubled from 184 to 472. However, even the fatality rate that year did not approach the levels of the early 2000's, when deaths exceeded 500 nearly every year. In 2006, there were 629 automobile-related deaths. In 2002, there were 662.

24/7 Wall St. is a USA TODAY content partner offering financial news and commentary. Its content is produced independently of USA TODAY.

Don’t let retirement stress marriage: Plan to b…

Author and former financial planner Frank Maselli tells a story of a man who retired and went home to spend his days with his wife. It didn't take long for him to become a major intrusion in his wife's world. He told her the way she did everything was wrong, even the garden she had tended for 25 years.

"She had to kick him out of the house," he said. "She made him get involved with a charity group and start going to the gym."

It's a huge adjustment to shift from spending two or three hours a night to spending all day together, says author and psychologist Robert Bornstein. "It happens all at once. It would be nice to go from full-time to half-time to quarter-time, but that's not how it works."

"Take the normal stress of a transition into retirement," says Maselli, "and throw in the fact that your wife can't stand seeing you all day."

People are working with financial planners to make sure that they will have enough money to retire. But what they are not doing, retirement experts say, is preparing psychologically for retirement. And as a result, three big problems are popping up.

First, retirees without any kind of a plan are just going home to their spouses with nothing to do and causing stress in their marriages. "We are the first generation who is going to live 30 years in retirement," says Maselli, who is based in Raleigh, N.C. "We are not prepared financially or emotionally. It will be a major issue."

Second, people who have been working for 30 or 35 years are suddenly home with absolutely nothing to do. "You lose a ready-made social network," says Bornstein. "We don't think about it that much. Much of your daily social contact comes from the office. When you are no longer going into the office, it's not uncommon for people to discover that they have few or no friends."

Third, says Bornstein, people underestimate the loss of status and self-esteem that comes from working. "So many people identify with their career or the company they own," he says. "Their pr! ofession and their identity are intertwined. The two are one and the same, So when they retire and separate, it is a loss from an emotional standpoint."

All three issues could be contributing to a record divorce rate among Baby Boomers. But the resulting stress can easily be avoided if people retire with a plan, retirement experts say. And foremost in that plan, set a schedule and make plans to do something ... anything. Just do not sit around with the TV remote.

"Most couples don't prepare well psychologically for retirement because they are so focused on financial and housing issues, which makes sense," Bornstein says.

Joe Heider, managing principal for the Ohio region for Rehmann Financial, says the issue reminds him of the Chevy Chase vacation movies. "It's kind of like being on a permanent family vacation. There is a lot of stress being with each other 24/7. All those things that were annoying suddenly became difficult — if they don't have hobbies."

"A big depression sets in with a lot of guys," Maselli says. "It's a major problem. You've worked for years. They give you a gold watch. Then what? What happens to that emotional intensity? It goes into me arranging my wife's spice drawer."

Heider says it can be a dangerous time. "I have seen clients who have developed serious drinking problems because they're bored," says Heider. "Happy hour used to start at 5:30; now it starts at noon. Retirement can be a wonderful thing. But depression, drinking, drug issues — they are all symptomatic of people bored and their lives have lost meaning for them."

Financial planner Brad Zucker, president of Safe Money Advisors in Las Vegas, says before people retire they need to find their passions. "Retirement could last 25 years," he says. "You want to be certain you have some kinds of interests and passions to make it through those years." Zucker says he has one client who turned his love of baseball into becoming an assistant coach for a high school baseball team — at 71.

Mase! lli teaches a program he calls "Never Retire," which deals with the psychological transition into retirement. "We actively tell people and teach people how to restructure their lives — not to retire," he says. "Start a business. Don't think about slowing down.

"You want to relax," he says. "That goes away in a week." He says retirees should think about mentoring, teaching, board memberships ... anything to keep busy. And make those necessary contacts before you retire.

Heider says retirees should also consider volunteering as an option. "Volunteer your expertise to whatever you were doing," he says. "Spend time mentoring a young entrepreneur. It gives them something meaningful to do with their time."

Retiree George Milonas, 84, of Las Vegas says he gets up every morning on schedule. "It's like going to a job," he says. His passions are sports, horse racing and playing the slots. And that works for him because he has the funds to do that, he says.

Janet Taylor, psychologist and a consultant with AARP's Life Reimagined program, says the success and well-being of couples in retirement depends on their pre-retirement planning. "Plan early; communicate expectations; and recognize what the existing demands are," she says.

"Initially, retirement might involve understanding and accepting changes in your personal privacy," Taylor says. "After a few months there is some normalcy and some understanding. But give yourself time to adjust to that."

But start planning early. "Rule No. 1 is to start thinking about this now," says Maselli. "What are you going to do? What kinds of things will you be doing together? How much time can you stand each other together? How will you structure your day so that you are out of the house?"

And how did it end for the husband who got kicked out of the house?

"He learned to stay active, and his wife learned to be patient with him," Maselli said. "The charity work led to more community involvement. But the gym thing never caught on."!

Is bailing out of the markets a right option?

I know it has been a frustrating five and half years, since 2008. All that can go wrong, did go wrong.  We plumbed the depths of despair more than once, in this period. Inflation has been quite high for most part of this period and had made you cry, though onions were not always the cause!

We have been despairing about the inaction, corruption, profligate spending of the government leading to fiscal deficits, the anti-business stance which they often take to score political brownie points…  The economy is in the doldrums even now.

The stock markets have inexplicably gone up inspite of the bad prognosis. There are two proximate emotional reasons for it the QE taper has been deferred in the US ( which is a case of kicking the can down the road, which means we need to confront the problem sooner than later; but that is another story ) and the euphoria which Raghuram Rajan brought in.

And you tell me it provides you with a great exit point.  Let's see if it makes sense.

Why had you invested the money?

You had invested the money to fulfill some future need -  like your children's education, retirement corpus creation etc. I suppose you had allocated the money in a premeditated manner, into different asset classes. Your advisor must have told you about the benefits of asset allocation.

Different assets have different characteristics and will not all give returns at the same point. At various points, it could be a different asset, which starts doing well. There is no way of knowing in advance, when which asset will perform. But we do know that over time a particular asset can offer returns at a certain level.

If all these were known, there should be no reason to panic in connection with the equity markets and it's returns.

Aren't the equity returns abysmally poor?

While complaining about the poor returns of over 5 years, we have forgotten the rise of the sensex from 3000 levels in 2003 to 20000 levels in end 2007. Even factoring for poor returns in the past 5.5 years, the returns from 2003 onwards till date is 18 percent plus compounded.

No asset class would be able to match that, including property. Do the math and check it out. Check out for various other periods ( longer the periods, the better  the chances for eliminating specific timing biases ) and equity will return robust double digit returns.

How long have you stayed invested?

You don't have investments done from 2003? All your investments were from 2006 & 2007 and you again sold most of it in 2009? That would be the problem.

In case of property, people are willing to stay invested for very long periods as buying and selling is too much of a hassle, has tax implications, costly due to costs like registration, stamp duty , brokerage etc, is not quoted on a daily basis and is illiquid & hence not easy to sell in the first place.

The main problem is that retail investors come in at the fag end of the rally and end up buying when prices are high. They also end up panicking and selling during downturns. That is the real reason why retail investors constantly complain that they do not make money.

So you want to exit? Where are you going to put in the money?

Many want to exit now as the stock markets are somewhere close to the historic highs. There seems to be a conviction that it cannot breach the highs made in the past. What is stopping the Sensex from going to say 25,000? We all know that the economic situation is bad. But, with time, it will resolve itself.

There is no reason to panic , exit and invest somewhere and try to time the entry back. We saw earlier that all assets will not perform at all points, didn't we? So, why are we losing sleep?

Just because debt is doing well, you cannot put all money there. That will ensure that the asset allocation suggested earlier on is deconstructed. Small tactical changes can be done, but the strategic asset allocation cannot be completely undone, without affecting the overall plan itself.

When do you get back in?

Many blithely talk of exiting now and investing when the market has bottomed out. Understanding that the market has bottomed out is as difficult as realizing that God resides within each one of us!

What happens is that when the markets trend lower, you expect it to go even lower. If it starts climbing up, you expect it to come back to the previous lowest point so that you may buy! Markets don't indulge you in your fantasies.

Apart from making some tactical changes in the asset allocation, it is best to not keep tinkering with the allocations. Maybe, there is a case for a review and recast but this does not mean undoing the portfolio created.

It may just mean supplanting some that have not done well with others that hold more potential, within the same asset class.

Conclusion -  Always seeking out what is doing well would not mean better outcomes. It only shows a lack of understanding about the fact that various assets perform well at various points and you need the various assets to reach the destination.

An orchard full of different trees will yield fruits of varying quantities and values in different years. One cannot change all papaya trees to mango trees, when Mango fruits are in demand and selling at high prices.

Every year some fruit may be very remunerative and others less so. But there is no way to predict which one will be in demand next year. On the balance it is better to have an orchard full of different trees than have only mango trees and do very well one year and court disaster the next.

Assets are no different and should be held in the right mix. It is a test of one's patience. I have heard the maxim that says that those endowed with patience rule the earth. No truer word had ever been spoken!

Before Buying ConAgra, Read the Label

NEW YORK (TheStreet) -- Packaged-food giant ConAgra (CAG) will report fiscal first-quarter results on Thursday before markets open.

Investors want to know if now's the best time to check out ConAgra. Perhaps. But I suggest we first read the label.

While ConAgra, which recently acquired Ralcorp, continues to take decent strides to synergize both businesses, management has been unable to address eroding margins and poor organic growth. ConAgra recently lowered its fiscal 2014 earnings-per-share guidance by 2.5%. I don't believe we can continue to pretend that meaningful operational improvements are imminent.

To that end, even though the stock has been down by as much as 17% over the past month, I'm just not yet ready to apply ConAgra to my value diet. On Thursday, I don't believe there is anything management will say to alter the near-term view of the company. From a market reaction point of view, there likely won't be any negative surprises either. [Read: Ex-JPMorgan Traders Could Face 20 Years in Prison] The company has already "pre-announced" the important details of the quarter, including what amounts to a four-year plan. Last week the company lowered its full-year earnings-per-share expectations from a high of $2.40 to a range of $2.34 and $2.38 per share. While this does suggest as much as a 10% year-over-year improvement, very little of that growth is organic. I've raised this point recently while discussing Campbell Soup Company (CPB), which, like ConAgra, has struggled with "real growth" for quite some time. Bulls have long argued how this metric is exaggerated. But I disagree, especially given the nature of this sector and how quickly consolidations occur. Organic growth, which measures a company's operational performance using only internal resources and excluding events like acquisitions, continues to be one of the best identifiable metrics (or "labels," if you will) when buying these stocks. Plus, it's anyone's guess when weak shipping volumes, which have also plagued (among others) Coca-Cola (KO), are going to rebound. Unlike PepsiCo (PEP), which has navigated the weak volume environment with partnerships like Yum! Brands (YUM) and the Doritos Locos Tacos of Taco Bell, ConAgra doesn't have that type of a card to play to offset what remains as challenging conditions. Management talked about steps that it's taking to improve sales performances. That's all well and good. But it assumes customers have suddenly been turned off by the company's many household brands including Swiss Miss, PAM and Healthy Choice.

If that were the case, deploying more sales and marketing efforts would be a great strategy. Even though ConAgra hasn't been a flawless executioner, I also believe the company's struggles are being affected just as much by macro weakness as it is by operational inefficiencies.

I won't go through the exercise of applying weight to this scale. But I believe that any overinvestment made by management to grow sales will only eat into the company's already weak earnings.

Let's not forget that first quarter non-GAAP earnings per share are expected to come in at 37 cents. This represents a 16% year-over-year decline. Given the company's history of eroding gross margins, investors should rethink applauding any efforts that increase expenses. [Read: Affordable Care Act Reality Check]

If it seems that I've being overly critical of ConAgra, it's completely unintentional. The truth is I love the brand. The stock, however, which has lagged its peers in the most important categories, including performance and returns on capital, is a completely different story. Until management can post consecutive quarters of earnings and margin growth, I would recommend that investors stay away. You don't need to take my word for it -- just read the label. At the time of publication, the author held no position in any of the stocks mentioned. Follow @saintssense This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Richard Saintvilus is a co-founder of StockSaints.com where he serves as CEO and editor-in-chief. After 20 years in the IT industry, including 5 years as a high school computer teacher, Saintvilus decided his second act would be as a stock analyst - bringing logic from an investor's point of view. His goal is to remove the complicated aspect of investing and present it to readers in a way that makes sense. His background in engineering has provided him with strong analytical skills. That, along with 15 years of trading and investing, has given him the tools needed to assess equities and appraise value. Richard is a Warren Buffett disciple who bases investment decisions on the quality of a company's management, growth aspects, return on equity, and price-to-earnings ratio. His work has been featured on CNBC, Yahoo! Finance, MSN Money, Forbes, Motley Fool and numerous other outlets. Follow @saintssense

No Name, No Problem: Tesla Gains 2% Despite Naming Issues in China

Yesterday, Tesla (TSLA) gained 1.8% after Bloomberg honed in on orders for the cars in Hong Kong. Making inroads into mainland China may be more difficult, however.

REUTERS

Reuters has reports on Tesla’s may not be able to use its name in China:

The maker of the best-selling U.S. electric car, the premium Model S sedan with a price tag of $70,000, had originally hoped to launch a flagship showroom in Beijing at the start of the year, according to three sources, but has had to put that idea on hold due in part to the trademark issue.

As a result, the 10-year-old company’s first shop-front in China, at the Parkview Green Fangcaodi mall in the capital, sits boarded up. While there is no Tesla sign, the shop is adorned with billboards of the Model S, which was launched in the United States last year.

Tesla also has yet to complete the registration process necessary to sell its cars in China, though Reuters say it’s almost there.

As Stifel’s James Albertine and Lucy Webster noted yesterday, Tesla’s future success depends, in part, on its ability to make cheaper cars and tap the global market.

Shares of Tesla have gained 1.7% to $159.75, General Motors (GM) has gained 0.2% to $35.07 and Ford Motor (F) has traded up 0.3% to $16.46.

Fed Strategy from Mohammed Ali

Bernanke's actions last week - failing to taper, yet still trying to maintain the illusion that QE is a good thing - are setting up a one-two punch that's not unlike boxing champion Mohammed Ali's famous "float like a butterfly, sting like a bee" approach.

If you recall, Ali was a master of the combination - some say the best ever. He loved to bring his opponents in close. Ali could see through the duplicity of his opponents' strategy and land punches that won decisively.

Ali did that using combinations that were based in fighting terms on two contrasts: high-low or short-long, or even left and right. He pressed every advantage he could find, even when others thought there were none to be had. Knowing he wanted to go the full 15 rounds, Ali developed a strategy that would become known as the "rope-a-dope" as a means of tiring out his opponents early on, then vanquishing them in later rounds when the fight really began.

I think we should take a page from Ali's playbook and split the "fight" Bernanke's presented us with into two distinct time zones: the current "round," and those that happen down the line. One short. One long.

Is that possible?

Absolutely. What's more, it's easy to do.

First, though, put yourself in Bernanke's place...

Losing His "Final Round" Would Crush You, the Markets, and Bernanke Himself

For all the lip service he pays to wanting growth, in reality, Bernanke's game is all about defense... from the moment he wakes up to the moment he goes to bed.

Why is pretty simple.

Right now, he has to keep a lid on everything from the looming budget battle to the Middle East. His risk is that the consumer gets crushed if he doesn't. So he's going to keep buying, lest he create a market crash that goes down on his watch, destroying his reputation and vaporizing the rumored $10 million advance for his memoir.

Longer term, he's got trillions of reasons why he doesn't want to pop the bubble, the most important of which is that he doesn't want to lose control over the bond markets and, by implication, interest rates.

The rub is that he will anyway. And I think Chairman Bernanke is acutely aware of that now, because derivatives traders are beginning to circle like sharks sensing blood in the water.

Factor in trillions of dollars, and there's enough fuel to drive rates higher for decades after he's gone, especially if you look at how far rates have fallen.

Since 1981, they've plummeted from 15% to a mere 3.46%, as of Monday.

The far more likely course of action is that they rise like they did from 1950 to 1981... especially when you look at the bigger picture and understand that interest rates move in multi-decade cycles.

(By the way, if you're wondering why there's no data from January 1, 1987, through September 30, 1993... The Fed discontinued the 20-year constant maturity series at the end of the calendar year 1986 and reinstated the series on October 1, 1993.)

A One-Two Investment Approach

1. For the near term, try the Pimco Strategic Global Government Fund (NYSE: RCS).

Managed by Allianz Global Investors Fund Management LLC, the fund is constructed of intermediate-term, high-quality government securities. The fund can invest in mortgage-related and asset-backed securities, too, if managers so desire. It's also got the flexibility to pick up foreign paper.

The dividends are paid monthly, which means that income-hungry investors will get cold, hard cash in their accounts regularly. That's not insignificant, considering the yield is a healthy 9.2% as of press time, according to Allianz.

2. For the longer term, I can't think of a better pick than the ProShares Short 20+ year Treasury (NYSE Arca: TBF).

This ETF is one of a specialized class of inverse funds that zigs when the universe around which it's constructed zags. In this case, TBF is designed to appreciate while longer-term U.S. bonds deteriorate.

As its name implies, the fund concentrates investments in U.S. Treasury securities with maturity dates longer than 20 years. That's great, because longer-dated maturities are the most volatile in the face of rising interest rates and, therefore, potentially offer some really great returns.

There's no yield, and the 0.95% in expenses doesn't make this the cheapest alternative out there, but I like the liquidity afforded us by the $1.47 billion in assets. It's also unleveraged, which means that performance-reducing tracking error that plagues similar double- and triple-leveraged funds is minimized.

At the end of the day, it's important to remember that interest rates will return to normal sooner or later, and these two investments will help you capture profits that can be yours for the taking when they do.

You don't have to play defense even if Bernanke does.

Best regards for great investing,

Keith

P.S. If you're wondering about equities, I'll be back in a few days with my take. But here's a hint if you just can't wait: Equities remain under-owned compared to bonds - this despite a 135% run up off March 2009 lows, and despite Bernanke's near laser-like focus on cheap money. So there's an incentive for the institutions to lever up even further and, in the process, goose stock market returns through the balance of the year. I know that with the S&P 500 and Dow waffling this week that this is hard to imagine, but don't forget - so was the concept of trillions of dollars of stimulus a few years ago.

Next: "The Secret to Superior Returns," where Keith shares one of the key strategies driving his Money Map Report's outstanding total return...

What to Look For This Earnings Season? - Ahead of Wall ...

Monday, July 8, 2013

Friday's strong jobs report shed a positive light on the labor market and likely increased the odds of Fed 'tapering' in the coming months. The bond market's move towards pricing in such an outcome has thankfully not become a problem for the stock market, at least not yet. We will know more later this week as minutes of the last FOMC meeting get released. But at this stage, the stock market is taking the 100 basis point jump in benchmark yields since early May in the stride.

Thankfully for us, the focus shifts from the Fed this week to the 2013 Q2 earnings season with the earnings reports from Alcoa (AA) later today and Yum Brands (YUM), J.P. Morgan (JPM) and Wells Fargo (WFC) later this week. Expectations remain low enough that companies wouldn't face much difficulty coming ahead of them. About two-thirds of companies beat earnings expectations in a typical quarter any way and there is no reason to think that the Q2 earnings season will be any different. My sense is that earnings growth and earnings surprises in the Q2 reporting cycle would be along the lines of what we saw in Q1.

Current expectations are for +0.4% growth in total earnings in Q2, down from +3.9% in early April, while total S&P 500 earnings increased by +2.8% in Q1. Nine of the 16 Zacks sectors are expected to show negative earnings growth in Q2. The growth picture in is even more underwhelming when Finance is excluded from the data. Outside of Finance, total earnings for the S&P 500 would be down -3.2% in Q2.

But even more significant than growth rates and surprises will be guidance. Guidance is always important, but it will likely be far more important this time around given the elevated expectations for the second half of the year. Total earnings are expected to be up +5.1% in 2013 Q3 and by +11.7% in Q4, giving us a second-half growth pace of +9.2% from the same period the year before, which comes after +2.7% earnings growth in the first half. Importantly, the gr! owth expectations for the second half are not due to easy comparisons – the level of total earnings expected in 2013 Q3 and Q4 represent new all-time high quarterly records.

My sense is that estimates need to come down in a big way. The market hasn't cared much in the recent past about negative revisions as aggregate earnings estimates have been coming down for over a year now. But if we are entering a post-QE world, as I believe we are, then it will likely be difficult to overlook negative earnings estimate revisions going forward. How the market responds to negative guidance over and the resulting negative revisions will tell us a lot about what to expect going forward.

Sheraz Mian
Director of Research

2 Health Care Stocks Rising on Big Volume

DELAFIELD, Wis. (Stockpickr) -- Professional traders running mutual funds and hedge funds don't just look at a stock's price moves; they also track big changes in volume activity. Often when above-average volume moves into an equity, it precedes a large spike in volatility.

Major moves in volume can signal unusual activity, such as insider buying or selling -- or buying or selling by "superinvestors."

Unusual volume can also be a major signal that hedge funds and momentum traders are piling into a stock ahead of a catalyst. These types of traders like to get in well before a large spike, so it's always a smart move to monitor unusual volume. That said, remember to combine trend and price action with unusual volume. Put them all together to help you decipher the next big trend for any stock.

With that in mind, let's take a look at several stocks rising on unusual volume today.

Alkermes

Alkermes (ALKS) is engaged in developing, manufacturing and commercializing medicines designed to yield better therapeutic outcomes and improve the lives of patients with serious diseases. This stock closed up 2% to $33.63 in Monday's trading session.

Monday's Volume: 3.14 million

Three-Month Average Volume: 1.51 million

Volume % Change: 98%

From a technical perspective, ALKS trended up here and broke out above some near-term overhead resistance at $34.30 with heavy upside volume. This move also pushed shares of ALKS into new 52-week-high territory, since the stock hit an intraday high of $34.74.

Traders should now look for long-biased trades in ALKS as long as it's trending above $31.50 and then once it sustains a move or close above Monday's high of $34.74 with volume that hits near or above 1.51 million shares. If we get that move soon, then ALKS will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $40 to $43.

Actavis

Actavis (ACT) is a global, integrated specialty pharmaceutical company engaged in developing, manufacturing and distributing generic, brand and biosimilar products. This stock closed up 1.3% at $134.48 in Monday's trading session.

Monday's Volume: 2.44 million

Three-Month Average Volume: 1.76 million

Volume % Change: 59%

Shares of ACT spiked modestly higher on Monday after Leerink upgraded the stock to outperform from market perform, citing valuation and confidence in the company's ability to beat earnings expectations. The firm raised its price target to $155 from $133.

From a technical perspective, ACT trended up here and broke out above its 52-week and three-year highs at $133 with above-average volume. This breakout is coming off a major base and consolidation pattern for shares of ACT, since the stock had previously been trending range-bound between $118.68 on the downside and $133 on the upside.

Traders should now look for long-biased trades in ACT as long as it's trending above $130 or $128 and then once it sustains a move or close above its new 52-week high at $135.99 with volume that's near or above 1.76 million shares. If we get that move soon, then ACT will set up to enter new 52-week- and three-year-high territory, which is bullish technical price action. Some possible upside targets off that move are $140 to $145, or even $150 to $155.

To see more stocks rising on unusual volume, check out the Stocks Rising On Unusual Volume portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

Ahead of Apple's Entry, Google Is Pushing Payments

The mobile payments industry doesn't have clear leadership right now. There are a slew of companies trying to tap the space, including eBay's PayPal and start-ups like Square, but no contender has emerged as the dominant player.

Of the five tech giants currently at war, Apple (NASDAQ: AAPL  ) and Google (NASDAQ: GOOG  ) have the most immediate structural advantages since mobile payments will inevitably be driven by smartphones, and iOS and Android power over 90% of all smartphones sold. Amazon.com has 209 million active customer accounts with payment info on file, but the e-tailer doesn't operate a smartphone platform (yet).

Google is a first-mover in mobile payments with Google Wallet, but it has failed to move the needle even after launching two years ago. Meanwhile, Apple hasn't made any official forays, instead only offering Passbook that doesn't have a direct way to make payments. The Mac maker is widely expected to enter in a big way as early as this fall, since the iPhone 5S will likely include a fingerprint sensor for biometric security. Those 575 million active iTunes accounts are just waiting to be tapped.

Mobile payments are too important to ignore, and Google is making a renewed push with Wallet ahead of Apple's presumed entry. The search giant has launched a fresh promotion to encourage developers to integrate Google Wallet into their apps. At Google I/O in May, the company had also unveiled a new application programming interface, or API, for developers to integrate Google Wallet into their Android apps. Google said only 3% of shoppers on mobile devices complete checkouts because there are so many steps.

Big G is broadening its horizons beyond just in-app purchases of virtual goods; Google is facilitating the payments for third-party merchants selling physical goods and services.

Apple's key differentiator may be the expected integrated fingerprint sensor, which is something that Google can't uniformly support since that's a hardware element -- a decision that falls into OEM jurisdiction. For now, Google has a first-mover advantage over Apple, which it should aggressively exploit before the iPhone maker shakes things up.

The war among the five tech titans is heating up, and mobile payments will be an important battleground to strengthen platform loyalty. Payments are just one skirmish in the grand scheme of things, and there are a plethora of other dimensions where the big five will compete. Read more for free by clicking here.

Why GRN Is Poised to Keep Plunging

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, the iPath Global Carbon ETN (NYSEMKT: GRN  ) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at GRN and see what CAPS investors are saying about the ETF right now.

GRN facts

Inception	June 2008
Total Net Assets	$920 thousand
Investment Approach	Seeks to replicate the Barclays Capital Global Carbon Index Total Return. The index is designed to measure the performance of the most liquid carbon-related credit plans and is designed to be an industry benchmark for carbon investors.
Expense Ratio	0.75%
1-Year / 3-Year / 5-Year Return	(56.6%) / (42%) / (36.2%)

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 54% of the 28 members who have rated GRN believe the ETF will underperform the S&P 500 going forward.

Just yesterday, one of those Fools, All-Star TerryHogan, succinctly summed up the GRN bear case for our community:

People are too busy looking for jobs to care about carbon emissions. Besides, there is already a huge transition to cleaner forms of energy (Natgas is so cheap in North America). Until China and India are growing faster than [8% per year] I'm not too bullish on the future of carbon credits.

If you want market-thumping returns, you need to protect your portfolio from any undue risk. Luckily, our special report on ETFs highlights three funds that are poised to soar in the next recovery. It's 100% free, but won't last forever, so click here to access it now.

Evidence Points to a Jamie Dimon Victory

At the beginning of next week, Jamie Dimon, the chairman and CEO of JPMorgan Chase (NYSE: JPM  ) , will learn whether or not the bank's shareholders have voted to strip him of one of these titles. Reports over the last two weeks have indicated that two major proxy advisory firms have recommended the roles be split. However, JPMorgan's three largest shareholders have yet to cast their ballots.

In the video below, Motley Fool contributor John Maxfield discusses the latest updates on this front.

With big finance firms still trading at deep discounts to their historic norms, investors everywhere are wondering if this is the new normal, or if finance stocks are a screaming buy today. The answer depends on the company, so to help figure out whether JPMorgan is a buy today, check out The Motley Fool's premium research report on the company. Click here now for instant access!

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More Expert Advice from The Motley Fool

The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock in our brand-new free report: "The Motley Fool's Top Stock for 2013." I invite you to take a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.

Guess? Takes 1 Step Forward, 2 Back

Just last week, Guess? (NYSE: GES  ) won a long legal battle with high-end designer Gucci, over the use of the letter G in Italy. The court ruled that Gucci could not stop Guess? from using the letter to brand its merchandise in Italy, and that the letter was not an intrusion on Gucci's double-G logo. While Guess? executives are surely happy to have the four-year-old case done with -- although other cases continue in France and China -- the victory isn't going to stop Guess? from struggling.

Over the last 12 months, the designer's stock has been flat, but there are new products and locations in the pipeline that it's hoping will turn the boat around. So far, efforts have had limited success, with the company reporting lower revenue, operating income, and comparable sales last year.

The fall of Guess?
A 6.6% drop in comparable-store sales over the company's last year, topped off by a 6.3% decline in the fourth quarter, set Guess? up for failure. The company was unable to entice customers into its stores, and as a result of the ensuing promotional environment, sales and margins fell. That's all behind us now, though, so what is Guess? going to do to fix it?

The answer isn't immediately clear. Whereas investors can look at the Asian expansion planned by Gap (NYSE: GPS  ) or the new Kate Spade Saturday line from Fifth and Pacific (NYSE: FNP  ) , Guess? has less to draw on. The company is forecasting fiscal 2014 revenue to be in line with fiscal 2013, and it's anticipating a decline in operating margin.

Those numbers are driven by the expectation of lowered comparable sales over the coming year. That's already been seen in the company's first quarter, as it reported operating margins were down. To support margins, the company is hoping to manage its pricing through the rest of the year, so that promotions are not as prevalent as they have been recently.

Other opportunities
Guess? has made a change at the top that may help the company over the long run. Just last week, it announced that it had a new chief design officer, Sharleen Ernster Lazear. Lazear comes to Guess? from Victoria's Secret, where she spent the last 13 years. The company must hope that her experience in the intimates retail world will translate to success with its own intimates line, which has played a large role in the company's South Korea operation.

The change might be too little, too late, as Fifth and Pacific is also pressing for an intimates line attached to its sluggish Juicy Couture line in early 2014. Outside of that market, Guess? is trying to make a play on fashion by jumping on board with cultural trends -- it has a Fast & Furious 6 line coming out -- but it still hasn't figured out a way to make its core competency more competitive.

In terms of that core, Gap has made a comeback with its denim line, and has been able to use that strength to draw new customers in. Comparable sales rose at Gap, as Guess? watched its comparable sales fall. If Guess? is going to be anything other than a cycle of flashes in the pan followed by burnouts, it needs to focus more on its core lineup, and use that to grow its business. For now, things don't look good.

One of the best-performing stocks in retail
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