1) Phil's Financial Tip of the Day:
Avoid buying these items until the weather warms up because they tend to get more expensive now.
Good article on what not to buy right now in cold weather climates.
8 Things You Shouldn't Buy in the Winter-From Financially Fit
Seasoned deal hunters know that it's not just about where you buy, but when you buy. As retailers put out new product lines and attempt to clear out old stock during the course of the year, prices on various items rise and fall.
Last November we took a look at which items tend to dip in price during the winter, but there are also several items that get more expensive during the colder months.
If you don't want to spend a lot of money this winter, here are eight items you should do your best to avoid buying until the weather warms up.
Corn and Other Summer Vegetables
Exactly what constitutes a seasonal vegetable will differ a bit depending on what part of the country you're from, but as a general rule you'll want to steer clear of vegetables typically grown in the warmer months, as they tend to be worse-tasting and more expensive come wintertime.
"Corn, in the middle of the summer, is going to be 15 cents an ear and taste great," says Jodi Furman, who writes the personal finance blog LiveFabuLESS. "If you buy now, it's going to be 40 to 50 cents an ear and won't be nearly as sweet."
Furman points us toward this helpful site, which allows you to select your area and discover which foods are in season during a given time of year. If you like fresh, local produce, it's a good place to start.
[See also: Save Money in 15 Minutes or Less ]
Warm Weather Items
Back in November we advised you to go out and buy outdoor furniture and grills, which at the time were deeply discounted as retailers looked to unload summer stock.
Well, hopefully you listened, because by this point in the season, such items are generally back to full price.
"Anything seasonal for summer, it's not a good time to buy now," says Furman. "You can find swimwear [discounted], but shorts, T-shirts and outdoor stuff are more expensive, because spring lines are just coming out now."
Camping Gear
Speaking of the great outdoors, you might be tempted to think that camping gear would be heavily discounted, as stores look to get people to buy during a slow time of year for outdoorsy activities.
But that's apparently not the case, says Lindsay Sakraida of DealNews.com, which tracks deals and discounts on a daily basis.
"You would think that no one's really wanting to go outdoors [in the winter], but we don't actually see as good deals as you do when things are warmer," she says. "They're trying to encourage sales when it is relevant to people."
Suitcases
By that same token, Sakraida says people are surprised to learn that travel gear such as suitcases aren't all that discounted during the winter.
"There aren't very notable deals," she says. "The best prices we see in the year typically start around March, and they hit their strongest point in August."
So if you've just booked your tickets for spring break, you may want to wait until shortly before your trip to buy your luggage.
[See also: Are You Tipping Correctly? ]
Computers
"The best sales on computers are not in winter, they're in August," says Mark Di Vincenzo, author of Buy Ketchup in May and Fly at Noon: A Guide to the Best Time to Buy This, Do That and Go There. "Back-to-school sales are the best time to buy."
He says that you'll also see good deals on electronics a few months down the road, for an interesting reason: The Japanese fiscal year begins in April, which brings new consumer electronics products, which in turn brings discounts on last year's models.
Snowblowers
This may go without saying, but at this point in the winter, it's too late to find a good discount on a snowblower.
"There's a high demand for snowblowers in much of the country in the winter," says Di Vincenzo.
"You'll see them start to go on sale in March, but never January and February."
So if you're anticipating heavy snowfall in your area this winter, you can either pay full sticker price for a snowblower or stick with a shovel and wait until the weather warms up to get a discounted machine for next year. (Our suggestion: Pay a neighborhood kid a few bucks to shovel your driveway while you stay warm inside.)
Cars
If you'd asked us a couple weeks ago, we would've told you to run out and buy a new car. But now that 2011 is behind us, the discounts won't be as deep.
"The best time to buy a car is the fall, and the further you get in the season, the lower the price," says Di Vincenzo. "But sales aren't nearly as good in the winter."
The turning of the calendar has more to do with this than you might think. While many people advise buying a car at the end of the month to take advantage of salesmen looking to fill monthly quotas, Di
Vincenzo says that annual quota is even more important.
"The big quota is the end of the year, so they're more willing to sweeten the pot in the fourth quarter," he says. After New Year's, not so much.
Linens
You might have heard that January is the perfect time to buy sheets and other linens, as that's when the big retailers have their so-called white sales. But Sakraida says that her site, DealNews.com, has examined such sales and found that they're more hype than reality, price-wise.
"[White sales] aren't really that much better than other sales we've seen, especially in June," she says. "A special name for a sale elicits excitement for an event, but it's not always all that special."
2) In the Markets today:
Stocks rose Monday as hopes for the coming U.S. earnings season overpowered a batch of unsettling headlines from Europe.
Stocks rose Monday as hopes for the coming U.S. earnings season overpowered a batch of unsettling headlines from Europe.
The Dow Jones Industrial Average added 32.77 points, or 0.3%, to 12392.69, building on its 1.2% rise in the first week of the new year. The Standard & Poor's 500-stock index finished up 2.89, or 0.2%, at 1280.70, and the Nasdaq Composite gained 2.34 points, or 0.1%, to 2676.56.
Alcoa was the strongest blue-chip stock, rising 2.9% in the regular session and adding another 2.2% after hours. The company's fourth-quarter results included a prediction for a deficit in the global aluminum supply in 2012. Alcoa's unofficial earnings-season kickoff follows efforts by several bellwether companies to ratchet down Wall Street's earnings expectations.
But European markets finished lower after the leaders of Germany and France on Monday turned up the pressure on Greece and its international creditors, amid building worries that the euro zone's Greek bailout was unraveling. The Stoxx Europe 600 shed 0.4%, and Germany's DAX lost 0.7%. Weak German economic data contributed to the glum mood. Several European countries are due to hold closely watched bond auctions later in the week.
"I think people are starting to express some hope about the U.S. economy, but 2012 is still a year marked with a lot of uncertainty," said Gary Flam, portfolio manager at Bel Air Investment Advisors.
"You've got the U.S. economy right now decoupling not only from Europe but Asia and the emerging economies. The question is how long that can be sustained. Something's got to give."
Auto stocks started the session strong but finished mixed as the Detroit auto show kicked off. Ford Motor rose 0.8% after disclosing plans to begin selling a plug-in, hybrid gasoline-electric version of its redesigned Fusion midsize sedan later this year. General Motors lost 0.4% despite showcasing two youth-targeted Chevrolet concept cars it says look and feel like sports cars but cost around $20,000.
A handful of technology stocks also posted gains after Reuters reported that Brocade Communications, which makes switches and software to connect corporate servers and data-storage systems, has received first-round bids from potential buyers. Brocade added 6.5%. Peer Juniper Networks was one of the top stocks in the S&P 500, rising 5.4%.
Asian exchanges were mixed. China's Shanghai Composite surged 2.9% after Chinese Premier Wen Jiabao indicated over the weekend that the stock market should be supported, while South Korea's Kospi Composite lost 0.9%.
Crude-oil futures lost 25 cents lower to settle at $101.31 a barrel, the third straight loss. Gold also lost ground, finishing 0.5% lower at $1,607.50 a troy ounce. The dollar lost ground against the euro and the yen.
CareFusion was the weakest stock in the S&P 500, shedding 8.7% after saying its fiscal-second-quarter results were likely to disappoint analyst forecasts.
Several stocks in the pharmaceutical industry traded actively. Bristol-Myers Squibb agreed to buy hepatitis-C drug developer Inhibitex for about $2.5 billion, triggering a 140% surge in the takeover target's stock. Bristol-Myers lost 0.9%.
GlaxoSmithKline's American depository shares fell 3.9% after analysts described as mixed a set of Phase III studies on its closely watched lung drug Relovair.
Idenix Pharmaceuticals ran up 37% after the biopharmaceutical company announced positive interim results from a clinical trial of its hepatitis-C treatment.
Zynga, the recent closely watched social-media initial public offering, hit a fresh low and finished down 9.2%.
3) Top financial story of the day:
Alcoa Inc , the largest U.S. aluminum producer, posted a fourth-quarter loss on Monday as slumping metal prices forced it to take a charge for cutting back production and market weakness continued.
Alcoa posts Q4 loss-From Reuters
Alcoa Inc (NYSE:AA - News), the largest U.S. aluminum producer, posted a
fourth-quarter loss on Monday but gave a positive outlook for metal demand in the aerospace, construction and other industries, lifting its stock price in after-hours trading.
It forecast 7 percent growth in global aluminum demand this year and said production cutbacks will help put the industry into deficit of around 600,000 tonnes this year.
This would help push up pricing of the metal, which fell 18 percent last year, contributing to the company's first loss in nine quarters.
Alcoa expects global growth for aluminum in the aerospace industry of 10 percent to 11 percent, with automotive growing 3 percent to 8 percent, commercial transportation 2 percent to 5 percent, packaging 2 percent to 3 percent and building and construction growing by 4 percent to 5 percent.
It also maintained its forecast for a doubling of aluminum demand by 2020.
In after-hours trading, Alcoa's stock rose 6 cents to $9.48.
Analyst Bridget Freas of Morningstar Inc in Chicago said the results were quite good. "The loss is not the headline. The revenue is actually higher-than-expected. Shipments are still holding up very strong. Demand for aluminum is actually quite strong," she said.
In its earnings release - traditionally the first of the season by a Dow component - Alcoa reported a loss as slumping metal prices forced it to take a charge for cutting back costly production and it cited market weakness, particularly in construction and packaging.
The loss from continuing operations was $193 million, or 18 cents per share, compared with a profit of $172 million, or 15 cents per share in the same quarter of 2010.
Excluding restructuring and other charges, the loss was $34 million, or 3 cents per share, the company said.
Revenue rose 6 percent to $6 billion even as the price of aluminum fell 6 percent in the fourth quarter and 18 percent in the year.
The 3-cent loss was in line with lowered estimates but the revenue beat estimates of $5.7 billion, according to Thomson Reuters I/B/E/S.
Last week, Alcoa said it will cut 12 percent of its global smelting capacity and take action to counter rising raw material costs. It is closing a smelter in Tennessee and curtailing capacity at plants in Texas, Italy and Spain.
Kuni Chen, of CRT Capital Group said: "It was an in-line quarter, obviously expectations came down pretty sharply coming in to the quarter.
"The commentary for the year ahead, in terms of the aluminum market expected to be in deficit, that's a positive, and certainly in line with our view that you will see more supply come out of the market if metal prices stay at these low levels."
4) Quote of the Day from Dave Ramsey.com:
The only way of finding the limits of the possible is by going beyond them into the impossible. — Arthur C. Clarke
Monday, January 9, 2012
Friday, January 6, 2012
Financial Headline News for Friday 1/6
1) Phil's Financial Tip of the Day:
If you are looking for some investment tips, here is something to ponder for 2012.
10 money-making investment ideas for 2012-From MarketWatch
Many stock investors thought 2011 would be upbeat, but they got beat up instead. The year for stocks was a year of shocks, while bonds remained unbroken.
Understandably, people are more wary than usual about where to invest this year. As you review your portfolio, think about how 2012 might be different from 2011 and ways it could bring more of the same. It pays to keep in mind one of esteemed former Wall Street analyst Bob Farrell’s cardinal rules of investing: “When all the experts and forecasts agree — something else is going to happen.” Read more: 10 investing rules tailor-made for tough markets.
Before delving into what 2012 could deliver, let’s recap how MarketWatch’s 10 investment ideas for 2011 did. Not bad, in fact, especially considering the almost daily assaults on the markets.Read more:
The 10 investment ideas we thought would make you money in 2011.
Most of the picks MarketWatch made in December 2010, based on recommendations and research from investment professionals, beat the Standard & Poor’s 500 Index (SNP:^GSPC - News) — though that’s not saying much about a year when the U.S. benchmark was flat on a price basis and up 2.1% with dividends reinvested.
The best advice was to run with the “Dogs of the Dow.” This strategy of buying the 10 highest-yielding stocks in the Dow Jones Industrial Average (DJI:^DJI - News) and holding for 12 months rewarded investors with stellar gains, up 17% for the year including reinvested dividends.
Adding consumer-staples stocks to consumer-discretionary stocks was another winner, with the staples sector gaining 10.5% and discretionary shares up 4.4%. Energy and technology sectors also outperformed the market, as did growth stocks.
The biggest losers: Materials-sector stocks, down almost 12%. Emerging-markets infrastructure plays and industrial-sector stocks also lost ground.
Nowadays investors’ mood is mixed at best. Mutual-fund shareholders have piled into bonds and fled U.S. stocks for several years; surveys of investment advisers show cautiousness about buying stocks, and hedge-fund managers appear increasingly bullish. Bond investors, meanwhile, have to question when this epic bull market will end.
Looking ahead, investors should tune out the noise, turn on the head lamps, and consider these 10 ways to position your portfolio in 2012:
1. Stick with 2011’s winners
Buy what’s worked and head for the beach? Not quite. But many of the headwinds investors fought in 2011 haven’t disappeared and could worsen, which means that some of last year’s winners could repeat.
Geopolitical and economic risks will, as always, impact financial markets and consumer prices short-term, with accompanying high volatility. Yet broadly speaking, in the current anemic global climate, where economic growth is increasingly scarce, pressure on interest rates and inflation isn’t much of an immediate threat.
U.S. stocks trounced their international counterparts, and look to do so again in 2012. Large-caps outperformed small- and midcaps, and growth-stock investors bested more bargain-minded value buyers. Expect more of that as well.
The hunt for yield is another priority. The Dogs of the Dow perform in volatile, tug-of-war markets and seem poised for another round. The 2012 Dogs are unchanged from 2011 except Procter & Gamble Co. (XNYS:PG - News) has replaced McDonald’s Corp. (XNYS:MCD - News). AT&T Inc. (XNYS:T) is again the highest-yielding Dow component.
In a slow-growth world where developed nations are deleveraging — much of Europe is likely to be mired in recession this year and the U.S. will be lucky if growth nears 2% — expect bond yields to remain low.
The riskiest play is long-term Treasurys. If the 30-year Treasury yield slides to 2% or 2.5% — perhaps in a euro-sparked panic — that probably would be the last gasp of the Treasury bond bull. Still, investors would win big on a total return basis, though not as much as in 2011.
As an alternative to volatile long- and intermediate-term Treasurys, consider high-quality corporate bonds, municipal bonds and income-producing stocks.
2. Own defensive stocks in a deleveraging age
Focus on capital preservation and the preservation of cash flow.
From a stock perspective, the classic defensive sectors include yield-rich consumer staples, health care and utilities.
Among these three, only the consumer-staples sector gets an enthusiastic nod from analysts at S&P Capital IQ. Utilities, especially shares of electric companies, enjoyed a tremendous run in 2011, up 14.5%. And while these companies offer hefty dividends, valuations have increased considerably and the S&P analysts expect market performance from the group in 2012. The analysts are also neutral about the health-care sector, which gained 10.2% last year.
3. Add some economic sensitivity
“A balanced sector approach that emphasizes both cyclical and defensive themes is critical to navigating this manic market,” said Alec Young, global equity strategist at S&P Capital IQ, in a recent research report.
That means you have to temper the urge for flight and beef up the portfolio with some fight. Put some money into cyclical sectors that lagged in 2011, including materials, industrials, energy and technology.
“Some of the beaten-down cyclical groups will come back,” said Doug Ramsey, chief investment officer at mutual fund firm Leuthold Group. Topping his list: shares of railroads, chemicals, industrials and materials.
4. Stick with dividend-paying growth stocks
U.S. corporate balance sheets — the fundamentals — are in excellent shape overall. Still, in a slow-growth climate the advantage goes to the best of the best. These companies tend to be found in areas that are less economically sensitive. They’re typically large-caps, with a “wide moat” of business, strong cash flow and a history of using capital for productive purposes including acquisitions, share buybacks and regularly higher dividend payments.
“Gravitate more to the income-oriented sectors of the U.S. market for the time being,” said David Rosenberg, chief economist and strategist at Toronto-based investment manager Gluskin Sheff + Associates, in a recent research report.
As examples of high-quality companies whose dividend yields top Treasurys, he points to AT&T, 3M Co. (XNYS:MMM - News), Exxon Mobil Corp. (XNYS:XOM - News), Emerson Electric Co. (XNYS:EMR - News), McDonald’s, Johnson & Johnson (XNYS:JNJ - News) , Colgate-Palmolive Co. (XNYS:CL - News) and Wal-Mart Stores Inc. (XNYS:WMT - News)
Other defensive, cash-rich growth stocks on Rosenberg’s suggested list include Procter & Gamble and Microsoft Corp. (XNAS:MSFT - News) Read more: Low-risk investing in highly volatile markets.
To be sure, this is an increasingly crowded trade. Many of these companies were “discovered” over the past year, as investors rotated to large-cap, higher-yielding payers. That’s one reason why last year’s best U.S. market sectors were utilities and consumer staples. McDonald’s, for instance, soared 35% in 2011.
So stay the course for now, but remember Bob Farrell’s rule and watch for weakness in this group heading into 2013, when smaller-cap stocks could begin to improve.
5. Consider small-cap stocks
Small-caps were market leaders for years, but despite a strong fourth-quarter 2011 showing the group has lost that poll position.
The Russell 2000 Index (:RUT) fell 4.2% in 2011, while the large-cap Russell 1000 Index (:RUI)
gained 1.5%.
But that dismal 2011 result might be a silver lining for small-caps.
“The best secular investment theme in the global equity markets is U.S. small-caps,” Richard Bernstein, CEO of investment firm Richard Bernstein Advisors, wrote in a December report to clients.
“Companies in the Russell 2000 have been producing positive earnings surprises at a better rate than most other regions of the world,” he added. “Although smaller U.S. companies’ earnings fundamentals are not yet superior to their larger U.S. counterparts...that relationship is likely to reverse.”
Moreover, small-caps’ general lack of international exposure could be a plus if, as expected, the U.S. dollar strengthens, according to Steven DeSanctis, small-cap strategist at Bank of America Merrill Lynch. A stronger dollar is a negative for larger companies with sizeable overseas operations. DeSanctis favors the larger and higher-quality small-cap names, which he noted could benefit from increasing merger and acquisition activity.
Yet with so much uncertainty looming over global markets and the prospect of continued volatility, putting money into small caps would require a big leap of faith for an investor in 2012. That said, look for attractive entry points to this unloved group.
6. Consider high-quality European stocks
Recession in the euro zone is not only expected, but may already have arrived. Shares of European stocks have been shorn — the average European stock mutual fund lost 15% in 2011. As always after a big selloff, there’s a case to be made that the worst is priced into these markets — although another leg down can’t be ruled out.
At the risk of trying to catch a falling knife, Michael Harnett, chief global equity strategist at Bank of America Merrill Lynch, told investors in a December research report to buy the “best and the distressed” in Europe.
“European stocks are the most oversold they have been relative to U.S. equities in 20 years,” he said.
“Go shopping for high quality European equities with strong earnings, healthy balance sheets and solid margins.”
Merrill’s recommended large-cap European stocks to weather recession include AstraZeneca Plc (XNYS:AZN - News) , Telefonica S.A. (XNYS:TEF - News), Total S.A. (XNYS:TOT - News) and BP Plc (XNYS:BP - News).
7. The U.S. dollar is the one-eyed king
“Muddling through” the recessionary morass is the most likely scenario analysts at Brown Brothers Harriman & Co. see for Europe.
“One of the results will be a weaker euro (ICAP.C:EURUSD) ,” the BBH analysts noted in a recent report. “But barring an outright collapse, depreciation is likely to be broadly welcomed by European officials and businesses. A weaker euro is also consistent with the easing of monetary policy.”
The U.S. dollar will be the beneficiary of a weaker euro. The U.S. Dollar Index (IFUS:DX-Y.NYB) gathered steam heading into 2012 ; a proxy for the dollar, PowerShares DB US Dollar Index Bullish Fund (ARCX:UUP - News), gained almost 6% in the last half of 2011. BBH analysts expect the euro to bottom at 1.20 in the second quarter of 2012 and end the year at 1.27 — about where it recently traded.
Said A. Gary Shilling, president of investment advisory firm A. Gary Shilling & Co., Inc. “The dollar should continue to appreciate, especially against the euro but also against commodity currencies” such as the Australian dollar (ICAP.C:AUDUSD) , Canadian dollar (ICAP.C:USDCAD) and Mexican peso. (ICAP.C:USDMXN)
“The dollar in the long run is likely to remain the world’s primary international trading and reserve currency,” Shilling noted. “There are,” he added, “no substitutes for the buck in the foreseeable future.” Read more: Look for 2012 to be the year of the dollar.
Of course, a stronger dollar means U.S.-based multinationals will lose a tailwind they’ve ridden for several years. Sales earned abroad are worth more when repatriated in weaker dollars, and no sector is more heavily exposed to developed and emerging markets than technology.
8. Stick with gold
Bank of America Merrill Lynch strategist Harnett expects the Federal Reserve, the European Central Bank and others to pump more money into a debt-laden global financial system, and that development would favor gold (XCEC:GC2G) .
“Gold remains one of the best ways to play this attempt by global policymakers to mitigate the negative impact of debt deleveraging,” he noted in a research report.
Rosenberg, the Gluskin Sheff economist, agreed: “So long as policymakers ensure that real short-term rates are negative — this is a very key indicator for gold — one should expect to see the secular price trend remain tilted to the upside,” he said.
Analysts at S&P are also positive about the yellow metal. The firm sees gold trading in a sideways pattern for much of the year before breaking out to the upside. Gold will finish 2012 at around $1,900 an ounce, S&P said.
In addition to exchange-traded fund proxy SPDR Gold Trust (ARCX:GLD - News) and iShares Gold Trust (ARCX:IAU - News), such a rebound would be favorable for gold miners, including S&P favorites Barrick Gold Corp. (XNYS:ABX - News), Newmont Mining Corp. (XNYS:NEM - News) and Randgold Resources Ltd. (XNAS:GOLD - News)
9. Vote for the presidential cycle
Observers of the U.S. stock market’s four-year “presidential cycle” know that 2011 didn’t live up to history. The third year of a president’s term has been the best, with the S&P 500 gaining 16% on average since 1945 without reinvested dividends, S&P data show. Last year the S&P 500 finished flat.
Election years usually aren’t as robust as the third, with the market up around 6% on average.
Typically, the market’s best sectors include consumer staples, energy and Industrials, with technology, materials and utilities posting below-average results.
Importantly, the U.S. market has done well in election years when an incumbent president is running again, regardless of the outcome, according to the Stock Trader’s Almanac. In addition, subpar third years of the cycle since 1945 have not led to a weak election year.
10. Volatility reigns; emphasize safety and income
The high volatility that shook investors in 2011 isn’t likely to subside this year. The challenge is to stay in the ring without getting knocked out.
Gluskin Sheff’s Rosenberg is steering investors to “safety and income at a reasonable price” as the global economy moves through what he called “the mother of all deleveraging cycles.”
Accordingly, he said, focus on high-quality stocks and bonds, income-producing oil and gas partnerships and real-estate investment trusts, precious metals and companies that produce or supply goods and services that people not only want, but must have.
“For 2012, tactical strategies will also be crucial, at least as much as in the roller-coaster ride of 2011,” Rosenberg added. “Investors should be making a special effort to fight dogma and keep an open mind.”
2) In the Markets today:
Stocks trade mixed even after hiring jumps in December; Europe worries weigh on the market
Stocks Retreat Despite Strong Jobs Data-From The Wall Street Journal
Stocks traded lower for a second day but remained on track for strong weekly gains as investors weighed worries about Europe against a drop in U.S. unemployment to its lowest level since February 2009.
The Dow Jones Industrial Average was off 47 points, or 0.4%, to 12369, in late Friday afternoon trading, after falling 83 points earlier in the session. The Standard & Poor's 500-stock index was off two points, or 0.2%, at 1279, while the Nasdaq Composite gained eight points, or 0.3%, to 2678.
The Dow was on pace to finish the holiday-shortened week with a gain of 1.2%, while the S&P 500 is up 1.7%.
Telecommunications stocks were the biggest drag on the broader market, while gains among consumer-discretionary stocks offset some of those losses. Walt Disney and Microsoft led the Dow gainers, rising 0.9% and 1.4%, respectively
The moves came on a day in which U.S. nonfarm payrolls increased by 200,000 in December, according to the Labor Department, topping expectations for 155,000 new jobs. The unemployment rate dropped to 8.5%, from a revised 8.7% in November. That is the lowest reading in nearly three years.
Skeptics, however, found plenty to quibble with. Some pointed to a holiday-season effect, with 42,000 of the job gains coming from messengers and couriers that many expect to be laid off after December.
Investors also were focused on developments overseas, particularly in Europe, where the Italian government's cost of borrowing money for 10 years remained above the 7% level deemed unsustainable over the long term.
Italy's FTSE MIB index fell 0.8%, dragged down by an 11% fall at UniCredit. The bank's stock has plunged 38% in the past four days amid worries about its $9.7 billion rights issue. Germany's DAX index dropped 0.6% after rising as much as 0.9% following the U.S. jobs report. Economic data for the region also showed unemployment rising for a seventh consecutive month, while November factory orders in Germany fell nearly 5%, erasing gains seen the previous month.
"That seems to be the overwhelming reality in the market: no matter what happens with U.S. economic numbers, people are still concerned that a slowdown in Europe is going to mean a slowdown in the U.S.," said Colleen Supran, principal and portfolio manager at Bingham, Osborn & Scarborough in San Francisco, which manages $2.2 billion in investments.
Asian bourses were mostly lower, with Japan's Nikkei Stock Average down 1.2% and South Korea's Kospi Composite shedding 1.1%. China's Shanghai Composite tacked on 0.7%.
Gold futures ticked 0.2% lower to settle at $1,616.10 a troy ounce, while crude-oil prices fell to about $101.40 a barrel. The euro fell to $1.2721 against the greenback. Treasury yields sank as investors flocked to the perceived safety of U.S. government debt. The yield on the benchmark 10-year note fell to 1.964%.
Stock trading volumes remained relatively subdued, with just 2.7 billion shares changing hands in New York Stock Exchange composite volume, with less than an hour of trading left.
In corporate news, Alcoa slumped 1.3% to lead the Dow decliners after the aluminum producer said it plans to close or curtail about 12% of its global smelting capacity in reaction to a drop in aluminum prices and as part of its efforts to reduce raw-materials costs.
Netflix surged 8.4% to bring its four-day gain to 25%. That puts Netflix atop the list of S&P 500 advancers for the day and the year.
RF Micro Devices tumbled 19% after the radio frequency components maker indicated that fiscal third-quarter revenue would fall short of forecasts and said gross margin would decline sequentially.
Eastman Kodak shed 9.1% to bring its stock price to 38 cents, as investors continued to put pressure on the troubled company.
Yahoo slipped 0.5% after a report in The Wall Street Journal said the company was facing a decision whether the company would support a tax deal that could save it $4 billion in taxes but could face scrutiny with the Internal Revenue Service.
Transocean lost 0.7% after the oil-services company said Ricardo Rosa will step down as chief financial officer and will be succeeded on an interim basis by former CFO Gregory Cauthen.
3) Top financial story of the day:
Employers add 200,000 jobs, unemployment rate falls to 8.5 percent, lowest in nearly 3 years.
Unemployment rate falls as economy adds 200K jobs-From AP
A burst of hiring in December pushed the unemployment rate to its lowest level in nearly three years, giving the economy a boost at the end of 2011.
The Labor Department said Friday that employers added a net 200,000 jobs last month and the unemployment rate fell to 8.5 percent, the lowest since February 2009. The rate has dropped for four straight months.
The hiring gains cap a six-month stretch in which the economy generated 100,000 jobs or more in each month. That hasn't happened since April 2006.
The steady drop is a positive sign for President Barack Obama, who is bound to face voters with the highest unemployment rate of any sitting president since World War II. Unemployment was 7.8 percent when Obama took office in January 2009.
Still, the level may matter less to his re-election chances if the rate continues to fall. History suggests that presidents' re-election prospects hinge less on the unemployment rate itself than on the rate's direction during the year or two before Election Day.
For all of 2011, the economy added 1.6 million jobs, better than the 940,000 added in 2010. The unemployment rate averaged 8.9 percent last year, down from 9.6 percent the previous year.
Economists forecast that the job gains will top 2.1 million this year.
The December report painted a picture of a broadly improving job market. Average hourly pay rose, providing consumers with more income to spend. The average work week lengthened, a sign that business is picking up and companies may soon need more workers. And hiring was strong across almost all major industries.
Manufacturing added 23,000 jobs. Transportation and warehousing added 50,000 jobs. Retailers added 28,000 jobs. Even the beleaguered construction industry added 17,000 workers.
A more robust hiring market coincides with other positive data that show the economy ended the year with some momentum.
Weekly applications for unemployment benefits have fallen to levels last seen more than three years ago. Holiday sales were solid. And November and December were the strongest months of 2011 for U.S. auto sales.
Many businesses say they are ready to step up hiring in early 2012 after seeing stronger consumer confidence and greater demand for their products.
4) Quote of the Day from Dave Ramsey.com:
Having an exciting destination is like setting a needle in your compass. From then on, the compass knows only one point—its ideal. And it will faithfully guide you there through the darkest nights and fiercest storms. — Daniel Boone
If you are looking for some investment tips, here is something to ponder for 2012.
10 money-making investment ideas for 2012-From MarketWatch
Many stock investors thought 2011 would be upbeat, but they got beat up instead. The year for stocks was a year of shocks, while bonds remained unbroken.
Understandably, people are more wary than usual about where to invest this year. As you review your portfolio, think about how 2012 might be different from 2011 and ways it could bring more of the same. It pays to keep in mind one of esteemed former Wall Street analyst Bob Farrell’s cardinal rules of investing: “When all the experts and forecasts agree — something else is going to happen.” Read more: 10 investing rules tailor-made for tough markets.
Before delving into what 2012 could deliver, let’s recap how MarketWatch’s 10 investment ideas for 2011 did. Not bad, in fact, especially considering the almost daily assaults on the markets.Read more:
The 10 investment ideas we thought would make you money in 2011.
Most of the picks MarketWatch made in December 2010, based on recommendations and research from investment professionals, beat the Standard & Poor’s 500 Index (SNP:^GSPC - News) — though that’s not saying much about a year when the U.S. benchmark was flat on a price basis and up 2.1% with dividends reinvested.
The best advice was to run with the “Dogs of the Dow.” This strategy of buying the 10 highest-yielding stocks in the Dow Jones Industrial Average (DJI:^DJI - News) and holding for 12 months rewarded investors with stellar gains, up 17% for the year including reinvested dividends.
Adding consumer-staples stocks to consumer-discretionary stocks was another winner, with the staples sector gaining 10.5% and discretionary shares up 4.4%. Energy and technology sectors also outperformed the market, as did growth stocks.
The biggest losers: Materials-sector stocks, down almost 12%. Emerging-markets infrastructure plays and industrial-sector stocks also lost ground.
Nowadays investors’ mood is mixed at best. Mutual-fund shareholders have piled into bonds and fled U.S. stocks for several years; surveys of investment advisers show cautiousness about buying stocks, and hedge-fund managers appear increasingly bullish. Bond investors, meanwhile, have to question when this epic bull market will end.
Looking ahead, investors should tune out the noise, turn on the head lamps, and consider these 10 ways to position your portfolio in 2012:
1. Stick with 2011’s winners
Buy what’s worked and head for the beach? Not quite. But many of the headwinds investors fought in 2011 haven’t disappeared and could worsen, which means that some of last year’s winners could repeat.
Geopolitical and economic risks will, as always, impact financial markets and consumer prices short-term, with accompanying high volatility. Yet broadly speaking, in the current anemic global climate, where economic growth is increasingly scarce, pressure on interest rates and inflation isn’t much of an immediate threat.
U.S. stocks trounced their international counterparts, and look to do so again in 2012. Large-caps outperformed small- and midcaps, and growth-stock investors bested more bargain-minded value buyers. Expect more of that as well.
The hunt for yield is another priority. The Dogs of the Dow perform in volatile, tug-of-war markets and seem poised for another round. The 2012 Dogs are unchanged from 2011 except Procter & Gamble Co. (XNYS:PG - News) has replaced McDonald’s Corp. (XNYS:MCD - News). AT&T Inc. (XNYS:T) is again the highest-yielding Dow component.
In a slow-growth world where developed nations are deleveraging — much of Europe is likely to be mired in recession this year and the U.S. will be lucky if growth nears 2% — expect bond yields to remain low.
The riskiest play is long-term Treasurys. If the 30-year Treasury yield slides to 2% or 2.5% — perhaps in a euro-sparked panic — that probably would be the last gasp of the Treasury bond bull. Still, investors would win big on a total return basis, though not as much as in 2011.
As an alternative to volatile long- and intermediate-term Treasurys, consider high-quality corporate bonds, municipal bonds and income-producing stocks.
2. Own defensive stocks in a deleveraging age
Focus on capital preservation and the preservation of cash flow.
From a stock perspective, the classic defensive sectors include yield-rich consumer staples, health care and utilities.
Among these three, only the consumer-staples sector gets an enthusiastic nod from analysts at S&P Capital IQ. Utilities, especially shares of electric companies, enjoyed a tremendous run in 2011, up 14.5%. And while these companies offer hefty dividends, valuations have increased considerably and the S&P analysts expect market performance from the group in 2012. The analysts are also neutral about the health-care sector, which gained 10.2% last year.
3. Add some economic sensitivity
“A balanced sector approach that emphasizes both cyclical and defensive themes is critical to navigating this manic market,” said Alec Young, global equity strategist at S&P Capital IQ, in a recent research report.
That means you have to temper the urge for flight and beef up the portfolio with some fight. Put some money into cyclical sectors that lagged in 2011, including materials, industrials, energy and technology.
“Some of the beaten-down cyclical groups will come back,” said Doug Ramsey, chief investment officer at mutual fund firm Leuthold Group. Topping his list: shares of railroads, chemicals, industrials and materials.
4. Stick with dividend-paying growth stocks
U.S. corporate balance sheets — the fundamentals — are in excellent shape overall. Still, in a slow-growth climate the advantage goes to the best of the best. These companies tend to be found in areas that are less economically sensitive. They’re typically large-caps, with a “wide moat” of business, strong cash flow and a history of using capital for productive purposes including acquisitions, share buybacks and regularly higher dividend payments.
“Gravitate more to the income-oriented sectors of the U.S. market for the time being,” said David Rosenberg, chief economist and strategist at Toronto-based investment manager Gluskin Sheff + Associates, in a recent research report.
As examples of high-quality companies whose dividend yields top Treasurys, he points to AT&T, 3M Co. (XNYS:MMM - News), Exxon Mobil Corp. (XNYS:XOM - News), Emerson Electric Co. (XNYS:EMR - News), McDonald’s, Johnson & Johnson (XNYS:JNJ - News) , Colgate-Palmolive Co. (XNYS:CL - News) and Wal-Mart Stores Inc. (XNYS:WMT - News)
Other defensive, cash-rich growth stocks on Rosenberg’s suggested list include Procter & Gamble and Microsoft Corp. (XNAS:MSFT - News) Read more: Low-risk investing in highly volatile markets.
To be sure, this is an increasingly crowded trade. Many of these companies were “discovered” over the past year, as investors rotated to large-cap, higher-yielding payers. That’s one reason why last year’s best U.S. market sectors were utilities and consumer staples. McDonald’s, for instance, soared 35% in 2011.
So stay the course for now, but remember Bob Farrell’s rule and watch for weakness in this group heading into 2013, when smaller-cap stocks could begin to improve.
5. Consider small-cap stocks
Small-caps were market leaders for years, but despite a strong fourth-quarter 2011 showing the group has lost that poll position.
The Russell 2000 Index (:RUT) fell 4.2% in 2011, while the large-cap Russell 1000 Index (:RUI)
gained 1.5%.
But that dismal 2011 result might be a silver lining for small-caps.
“The best secular investment theme in the global equity markets is U.S. small-caps,” Richard Bernstein, CEO of investment firm Richard Bernstein Advisors, wrote in a December report to clients.
“Companies in the Russell 2000 have been producing positive earnings surprises at a better rate than most other regions of the world,” he added. “Although smaller U.S. companies’ earnings fundamentals are not yet superior to their larger U.S. counterparts...that relationship is likely to reverse.”
Moreover, small-caps’ general lack of international exposure could be a plus if, as expected, the U.S. dollar strengthens, according to Steven DeSanctis, small-cap strategist at Bank of America Merrill Lynch. A stronger dollar is a negative for larger companies with sizeable overseas operations. DeSanctis favors the larger and higher-quality small-cap names, which he noted could benefit from increasing merger and acquisition activity.
Yet with so much uncertainty looming over global markets and the prospect of continued volatility, putting money into small caps would require a big leap of faith for an investor in 2012. That said, look for attractive entry points to this unloved group.
6. Consider high-quality European stocks
Recession in the euro zone is not only expected, but may already have arrived. Shares of European stocks have been shorn — the average European stock mutual fund lost 15% in 2011. As always after a big selloff, there’s a case to be made that the worst is priced into these markets — although another leg down can’t be ruled out.
At the risk of trying to catch a falling knife, Michael Harnett, chief global equity strategist at Bank of America Merrill Lynch, told investors in a December research report to buy the “best and the distressed” in Europe.
“European stocks are the most oversold they have been relative to U.S. equities in 20 years,” he said.
“Go shopping for high quality European equities with strong earnings, healthy balance sheets and solid margins.”
Merrill’s recommended large-cap European stocks to weather recession include AstraZeneca Plc (XNYS:AZN - News) , Telefonica S.A. (XNYS:TEF - News), Total S.A. (XNYS:TOT - News) and BP Plc (XNYS:BP - News).
7. The U.S. dollar is the one-eyed king
“Muddling through” the recessionary morass is the most likely scenario analysts at Brown Brothers Harriman & Co. see for Europe.
“One of the results will be a weaker euro (ICAP.C:EURUSD) ,” the BBH analysts noted in a recent report. “But barring an outright collapse, depreciation is likely to be broadly welcomed by European officials and businesses. A weaker euro is also consistent with the easing of monetary policy.”
The U.S. dollar will be the beneficiary of a weaker euro. The U.S. Dollar Index (IFUS:DX-Y.NYB) gathered steam heading into 2012 ; a proxy for the dollar, PowerShares DB US Dollar Index Bullish Fund (ARCX:UUP - News), gained almost 6% in the last half of 2011. BBH analysts expect the euro to bottom at 1.20 in the second quarter of 2012 and end the year at 1.27 — about where it recently traded.
Said A. Gary Shilling, president of investment advisory firm A. Gary Shilling & Co., Inc. “The dollar should continue to appreciate, especially against the euro but also against commodity currencies” such as the Australian dollar (ICAP.C:AUDUSD) , Canadian dollar (ICAP.C:USDCAD) and Mexican peso. (ICAP.C:USDMXN)
“The dollar in the long run is likely to remain the world’s primary international trading and reserve currency,” Shilling noted. “There are,” he added, “no substitutes for the buck in the foreseeable future.” Read more: Look for 2012 to be the year of the dollar.
Of course, a stronger dollar means U.S.-based multinationals will lose a tailwind they’ve ridden for several years. Sales earned abroad are worth more when repatriated in weaker dollars, and no sector is more heavily exposed to developed and emerging markets than technology.
8. Stick with gold
Bank of America Merrill Lynch strategist Harnett expects the Federal Reserve, the European Central Bank and others to pump more money into a debt-laden global financial system, and that development would favor gold (XCEC:GC2G) .
“Gold remains one of the best ways to play this attempt by global policymakers to mitigate the negative impact of debt deleveraging,” he noted in a research report.
Rosenberg, the Gluskin Sheff economist, agreed: “So long as policymakers ensure that real short-term rates are negative — this is a very key indicator for gold — one should expect to see the secular price trend remain tilted to the upside,” he said.
Analysts at S&P are also positive about the yellow metal. The firm sees gold trading in a sideways pattern for much of the year before breaking out to the upside. Gold will finish 2012 at around $1,900 an ounce, S&P said.
In addition to exchange-traded fund proxy SPDR Gold Trust (ARCX:GLD - News) and iShares Gold Trust (ARCX:IAU - News), such a rebound would be favorable for gold miners, including S&P favorites Barrick Gold Corp. (XNYS:ABX - News), Newmont Mining Corp. (XNYS:NEM - News) and Randgold Resources Ltd. (XNAS:GOLD - News)
9. Vote for the presidential cycle
Observers of the U.S. stock market’s four-year “presidential cycle” know that 2011 didn’t live up to history. The third year of a president’s term has been the best, with the S&P 500 gaining 16% on average since 1945 without reinvested dividends, S&P data show. Last year the S&P 500 finished flat.
Election years usually aren’t as robust as the third, with the market up around 6% on average.
Typically, the market’s best sectors include consumer staples, energy and Industrials, with technology, materials and utilities posting below-average results.
Importantly, the U.S. market has done well in election years when an incumbent president is running again, regardless of the outcome, according to the Stock Trader’s Almanac. In addition, subpar third years of the cycle since 1945 have not led to a weak election year.
10. Volatility reigns; emphasize safety and income
The high volatility that shook investors in 2011 isn’t likely to subside this year. The challenge is to stay in the ring without getting knocked out.
Gluskin Sheff’s Rosenberg is steering investors to “safety and income at a reasonable price” as the global economy moves through what he called “the mother of all deleveraging cycles.”
Accordingly, he said, focus on high-quality stocks and bonds, income-producing oil and gas partnerships and real-estate investment trusts, precious metals and companies that produce or supply goods and services that people not only want, but must have.
“For 2012, tactical strategies will also be crucial, at least as much as in the roller-coaster ride of 2011,” Rosenberg added. “Investors should be making a special effort to fight dogma and keep an open mind.”
2) In the Markets today:
Stocks trade mixed even after hiring jumps in December; Europe worries weigh on the market
Stocks Retreat Despite Strong Jobs Data-From The Wall Street Journal
Stocks traded lower for a second day but remained on track for strong weekly gains as investors weighed worries about Europe against a drop in U.S. unemployment to its lowest level since February 2009.
The Dow Jones Industrial Average was off 47 points, or 0.4%, to 12369, in late Friday afternoon trading, after falling 83 points earlier in the session. The Standard & Poor's 500-stock index was off two points, or 0.2%, at 1279, while the Nasdaq Composite gained eight points, or 0.3%, to 2678.
The Dow was on pace to finish the holiday-shortened week with a gain of 1.2%, while the S&P 500 is up 1.7%.
Telecommunications stocks were the biggest drag on the broader market, while gains among consumer-discretionary stocks offset some of those losses. Walt Disney and Microsoft led the Dow gainers, rising 0.9% and 1.4%, respectively
The moves came on a day in which U.S. nonfarm payrolls increased by 200,000 in December, according to the Labor Department, topping expectations for 155,000 new jobs. The unemployment rate dropped to 8.5%, from a revised 8.7% in November. That is the lowest reading in nearly three years.
Skeptics, however, found plenty to quibble with. Some pointed to a holiday-season effect, with 42,000 of the job gains coming from messengers and couriers that many expect to be laid off after December.
Investors also were focused on developments overseas, particularly in Europe, where the Italian government's cost of borrowing money for 10 years remained above the 7% level deemed unsustainable over the long term.
Italy's FTSE MIB index fell 0.8%, dragged down by an 11% fall at UniCredit. The bank's stock has plunged 38% in the past four days amid worries about its $9.7 billion rights issue. Germany's DAX index dropped 0.6% after rising as much as 0.9% following the U.S. jobs report. Economic data for the region also showed unemployment rising for a seventh consecutive month, while November factory orders in Germany fell nearly 5%, erasing gains seen the previous month.
"That seems to be the overwhelming reality in the market: no matter what happens with U.S. economic numbers, people are still concerned that a slowdown in Europe is going to mean a slowdown in the U.S.," said Colleen Supran, principal and portfolio manager at Bingham, Osborn & Scarborough in San Francisco, which manages $2.2 billion in investments.
Asian bourses were mostly lower, with Japan's Nikkei Stock Average down 1.2% and South Korea's Kospi Composite shedding 1.1%. China's Shanghai Composite tacked on 0.7%.
Gold futures ticked 0.2% lower to settle at $1,616.10 a troy ounce, while crude-oil prices fell to about $101.40 a barrel. The euro fell to $1.2721 against the greenback. Treasury yields sank as investors flocked to the perceived safety of U.S. government debt. The yield on the benchmark 10-year note fell to 1.964%.
Stock trading volumes remained relatively subdued, with just 2.7 billion shares changing hands in New York Stock Exchange composite volume, with less than an hour of trading left.
In corporate news, Alcoa slumped 1.3% to lead the Dow decliners after the aluminum producer said it plans to close or curtail about 12% of its global smelting capacity in reaction to a drop in aluminum prices and as part of its efforts to reduce raw-materials costs.
Netflix surged 8.4% to bring its four-day gain to 25%. That puts Netflix atop the list of S&P 500 advancers for the day and the year.
RF Micro Devices tumbled 19% after the radio frequency components maker indicated that fiscal third-quarter revenue would fall short of forecasts and said gross margin would decline sequentially.
Eastman Kodak shed 9.1% to bring its stock price to 38 cents, as investors continued to put pressure on the troubled company.
Yahoo slipped 0.5% after a report in The Wall Street Journal said the company was facing a decision whether the company would support a tax deal that could save it $4 billion in taxes but could face scrutiny with the Internal Revenue Service.
Transocean lost 0.7% after the oil-services company said Ricardo Rosa will step down as chief financial officer and will be succeeded on an interim basis by former CFO Gregory Cauthen.
3) Top financial story of the day:
Employers add 200,000 jobs, unemployment rate falls to 8.5 percent, lowest in nearly 3 years.
Unemployment rate falls as economy adds 200K jobs-From AP
A burst of hiring in December pushed the unemployment rate to its lowest level in nearly three years, giving the economy a boost at the end of 2011.
The Labor Department said Friday that employers added a net 200,000 jobs last month and the unemployment rate fell to 8.5 percent, the lowest since February 2009. The rate has dropped for four straight months.
The hiring gains cap a six-month stretch in which the economy generated 100,000 jobs or more in each month. That hasn't happened since April 2006.
The steady drop is a positive sign for President Barack Obama, who is bound to face voters with the highest unemployment rate of any sitting president since World War II. Unemployment was 7.8 percent when Obama took office in January 2009.
Still, the level may matter less to his re-election chances if the rate continues to fall. History suggests that presidents' re-election prospects hinge less on the unemployment rate itself than on the rate's direction during the year or two before Election Day.
For all of 2011, the economy added 1.6 million jobs, better than the 940,000 added in 2010. The unemployment rate averaged 8.9 percent last year, down from 9.6 percent the previous year.
Economists forecast that the job gains will top 2.1 million this year.
The December report painted a picture of a broadly improving job market. Average hourly pay rose, providing consumers with more income to spend. The average work week lengthened, a sign that business is picking up and companies may soon need more workers. And hiring was strong across almost all major industries.
Manufacturing added 23,000 jobs. Transportation and warehousing added 50,000 jobs. Retailers added 28,000 jobs. Even the beleaguered construction industry added 17,000 workers.
A more robust hiring market coincides with other positive data that show the economy ended the year with some momentum.
Weekly applications for unemployment benefits have fallen to levels last seen more than three years ago. Holiday sales were solid. And November and December were the strongest months of 2011 for U.S. auto sales.
Many businesses say they are ready to step up hiring in early 2012 after seeing stronger consumer confidence and greater demand for their products.
4) Quote of the Day from Dave Ramsey.com:
Having an exciting destination is like setting a needle in your compass. From then on, the compass knows only one point—its ideal. And it will faithfully guide you there through the darkest nights and fiercest storms. — Daniel Boone
Thursday, January 5, 2012
Financial Headline News for Thursday 1/5
1) Phil's Financial Tip of the Day:
A classic example of how a small daily not essential expense will lead to a gigantic monthly and yearly expense amount. This could easily be taken out of your budget to save money.
What Your Starbucks Habit Really Costs You-From CBS MoneyWatch
It's getting a little more expensive to have a Starbucks habit.
The Seattle-based coffee company (SBUX) said Tuesday that it would hike prices by an average of 1% in the Northeast and Sunbelt regions, where prices haven't been raised in roughly five years.
Starbucks is following the lead of other food companies, including McDonald's and Chipotle, which have hiked prices in the past year to cope with rising commodity costs.
The company said the average price of a "tall" -- the smallest drink -- brewed beverage will rise by 10 cents in New York. This morning the price hike was already in effect, as caffeine cravers shelled out $2.01 for a cup of coffee, up from $1.91. The coffee house allows for some regional pricing, so the actual cost of your morning habit could vary. But that could easily bump the price of a large -- "venti" -- latte over $4 a cup, not including tip.
If one of your resolutions is to cut costs this year, it might be worth noting what your coffee habit is going to cost you over time.
If you buy one $4 latte each day, that coffee habit will set you back $28 a week, about $120 a month and $1,460 per year. Keep that up for five years, and you've slurped away $7,300, not including any money you might have earned by investing your cash instead. If you account for missed investment returns, the loss amounts to roughly $9,300 (assuming a 9% average return).
After 10 years, your Starbucks habit costs you a car. After 30 years, the $239,891 that you drank away (including investment returns), could have bought a house. Over 40 years, the Starbucks habit could reduce your retirement nest-egg by an astounding $634,428 -- enough to generate an income of more than $2,600 a month.
No one is suggesting that you give up your daily jolt of joe. (This would be a particularly unlikely suggestion from me -- the person whose caffeine addiction built that impressive tower of latte cups.) But you might want to consider a cheaper way to go at it.
Costco, for example, sells a 2.5 pound bag of Starbucks French roast for $22; A couple gallons of milk will run another $7. For that $29 -- roughly the cost of a week of barista-made lattes -- you can have a pot of lattes every day for at least a month. Net savings: $91.
Invest that in a diversified basket of stocks and you could have your jolt and your retirement plan too. Based on these numbers -- and investment returns of 9% annually (about the historic average) -- the amount you save by brewing your own Starbucks coffee could be worth $481,108 at retirement 40 years from now.
Just something to think about.
2) In the Markets today:
Renewed concern over Europe banks shares spotlight with positive signals about U.S. jobs.
Dow flat, other stock indexes up as investors eye Europe-From USA Today
The tech-laden Nasdaq composite ended up nearly 0.8% after an upward climb throughout much of the day although broader indexes bounced up and down as renewed concern about Europe outweighed positive U.S. jobs news.
Those reports could raise market expectations for Friday's closely watched monthly employment report from the Labor Department. The unemployment rate and the number of nonfarm jobs created in a month often set the market's tone for a week or two after their release. The expectation is that the U.S. economy generated around 150,000 jobs in December.
3) Top financial story of the day:
The private sector added a white-hot 325,000 jobs in December, while initial claims for unemployment benefits fell again last week.
Positive Signs for Jobs Market-From The Wall Street Journal
A continued drop in the number of people seeking new unemployment benefits in the U.S. last week and a large gain in private sector employment reported by payroll giant Automatic Data Processing offered fresh signals that the labor market began to stabilize as 2011 drew to a close.
Separately, service-sector activity in the U.S. economy grew in December, at a pace similar to the prior month.
Initial jobless claims fell by 15,000 to a seasonally adjusted 372,000 in the week ended Dec. 31, the Labor Department said Thursday.
Last week was the eighth time in the past nine that new claims came in below the 400,000 mark, a positive sign as economists generally believe claims must remain consistently below that level to signal a real turnaround.
Economists surveyed by Dow Jones Newswires had forecast claims would fall by 6,000 to 375,000.
For the week ended Dec. 24, claims were revised up to 387,000 from an originally reported 381,000.
The four-week moving average of new jobless claims, which smooths out volatile weekly figures, decreased last week by 3,250 to 373,250, the lowest level since June 7, 2008.
Among those adding jobs are discount retailer Dollar General, which said this week that it will hire 1,300 in California to staff 50 new stores and a distribution center.
Even with the recent decline in those seeking new jobless benefits, unemployment remains well above historic norms.
On Friday the government will release the December unemployment rate, the broadest snapshot of the labor market. Economists forecast that the rate will tick up to 8.7% from 8.6% in November.
While fewer Americans are losing their jobs, work remains scarce in areas of the economy that suffered the largest job losses during the most recent downturn, said Joanie Ruge, chief employment analyst with staffing firm Randstad Holdings USA.
"Until we see more job creation in manufacturing and construction, the unemployment rate is likely to remain above 8%," she said ahead of Thursday's report.
The Federal Reserve predicts an unemployment rate in a range of 8.5% to 8.7% at the end of 2012.
With inflation expected to come down this year, the central bank is considering additional efforts to prop up the economy to meet its mandate to keep unemployment in check.
Continuing claims are reported with a one-week lag.
The unemployment rate for workers with unemployment insurance for the week ending Dec. 24 was 2.8%, compared with 2.9% the prior week.
The state-by-state breakdown in initial jobless claims, which is also released with a one-week lag, showed Georgia with the biggest decrease in initial claims, down 1,105 as there were fewer layoffs in the construction, service and manufacturing industries.
California saw the biggest jump in claims the week ended Dec. 24, up by 16,490 due to layoffs in the service sector.
A Labor Department official said there was nothing unusual about the latest state-level claims data.
"December's advance was the largest monthly gain since December 2010, reflecting strong job creation across most industries," said ADP President and Chief Executive Carlos Rodriguez. "Small and medium-sized businesses were hiring at a similar pace," he said, adding that "job creation among large employers was also encouraging."
In the report, large firms added 37,000 jobs, while the service sector as a whole added 273,000 new employees. The goods-producing sector added 52,000.
The ADP report comes just ahead of Friday's release of the December nonfarm payrolls report. The Friday report is frequently the most important release in any given month's calendar of economic events, offering key insights into the health of the economy.
The challenge for financial markets is that the job data generated in the ADP report doesn't line up all that well with the data produced by the government. Economists currently expect that the improvements that have been seen in hiring over recent months will have continued into the final month of the year, with the nation expected to have added 155,000 jobs, versus the 120,000-job gain in November. The unemployment rate is seen ticking up a hair to 8.7%, from 8.6%.
Macroeconomic Advisers' Joel Prakken, who partners with ADP to create the report, was cautiously optimistic about the report. "If you put this figure in a larger context, you can still feel pretty comfortable there's a nice signal in this number," Mr. Prakken said. But the economist added "I want to be a little cautious about this number" given the magnitude of the gain.
Mr. Prakken noted it's entirely possible seasonal factors distorted the December number and made it look better than it should have. But he said the overall direction of the number is undeniable, and it's possible the unemployment rate will fall further from what is now a 8.6% level. Mr. Prakken did note that government hiring isn't captured in the ADP report, and that it may have a negative influence on the national hiring data due on Friday.
The very large job gain reported for December caught Wall Street off guard. "Nothing is at face value when it comes to ADP," said Eric Green of TD Securities. "We were bullish on the number Friday, comfortably above consensus, but not this bullish and do not expect a payroll gain tomorrow to reflect this ADP number," he said.
Readings in the ISM survey above 50 indicate growth, and the higher the number, the more broad-based the gain. The numbers have nothing to say about the magnitude of growth, however. The non-manufacturing index is comprised mostly, but not exclusively, of service sector activity, which makes up most of America's economic output.
The report arrives at a time of growing optimism over the path of U.S. growth. Earlier this week, the ISM reported that factory activity showed a modest increase during December.
In the non-manufacturing report, employment contracted at a slower pace, with the jobs index at 49.4, from 48.9. Meanwhile, inflation rose at a steady pace, with the prices index moving to 61.2, versus 62.5 the month before.
4) Quote of the Day from Dave Ramsey.com:
In the middle of difficulty lies opportunity. — Albert Einstein
A classic example of how a small daily not essential expense will lead to a gigantic monthly and yearly expense amount. This could easily be taken out of your budget to save money.
What Your Starbucks Habit Really Costs You-From CBS MoneyWatch
It's getting a little more expensive to have a Starbucks habit.
The Seattle-based coffee company (SBUX) said Tuesday that it would hike prices by an average of 1% in the Northeast and Sunbelt regions, where prices haven't been raised in roughly five years.
Starbucks is following the lead of other food companies, including McDonald's and Chipotle, which have hiked prices in the past year to cope with rising commodity costs.
The company said the average price of a "tall" -- the smallest drink -- brewed beverage will rise by 10 cents in New York. This morning the price hike was already in effect, as caffeine cravers shelled out $2.01 for a cup of coffee, up from $1.91. The coffee house allows for some regional pricing, so the actual cost of your morning habit could vary. But that could easily bump the price of a large -- "venti" -- latte over $4 a cup, not including tip.
If one of your resolutions is to cut costs this year, it might be worth noting what your coffee habit is going to cost you over time.
If you buy one $4 latte each day, that coffee habit will set you back $28 a week, about $120 a month and $1,460 per year. Keep that up for five years, and you've slurped away $7,300, not including any money you might have earned by investing your cash instead. If you account for missed investment returns, the loss amounts to roughly $9,300 (assuming a 9% average return).
After 10 years, your Starbucks habit costs you a car. After 30 years, the $239,891 that you drank away (including investment returns), could have bought a house. Over 40 years, the Starbucks habit could reduce your retirement nest-egg by an astounding $634,428 -- enough to generate an income of more than $2,600 a month.
No one is suggesting that you give up your daily jolt of joe. (This would be a particularly unlikely suggestion from me -- the person whose caffeine addiction built that impressive tower of latte cups.) But you might want to consider a cheaper way to go at it.
Costco, for example, sells a 2.5 pound bag of Starbucks French roast for $22; A couple gallons of milk will run another $7. For that $29 -- roughly the cost of a week of barista-made lattes -- you can have a pot of lattes every day for at least a month. Net savings: $91.
Invest that in a diversified basket of stocks and you could have your jolt and your retirement plan too. Based on these numbers -- and investment returns of 9% annually (about the historic average) -- the amount you save by brewing your own Starbucks coffee could be worth $481,108 at retirement 40 years from now.
Just something to think about.
2) In the Markets today:
Renewed concern over Europe banks shares spotlight with positive signals about U.S. jobs.
Dow flat, other stock indexes up as investors eye Europe-From USA Today
The tech-laden Nasdaq composite ended up nearly 0.8% after an upward climb throughout much of the day although broader indexes bounced up and down as renewed concern about Europe outweighed positive U.S. jobs news.
The Dow Jones industrial average was virtually flat, shedding nearly 3 points to settle at 12,416. The S&P 500 closed up 0.3%, a gain of nearly 4 points.
The euro fell to a 15-month low against the dollar and stocks fell sharply in Italy and Spain.
Stocks fell the most in European countries with the biggest debt problems. Indexes in Italy, Greece and Spain fell 3% or more. Markets in the bigger, more stable economies of Britain, Germany and France fell slightly. The euro dropped to $1.28, its lowest level since September 2010.
Investors have reason to feel positive about the hiring outlook in the U.S. The Labor Department said the number of people seeking unemployment benefits fell further last week, ending the year on a three-month run of declines that point to stronger job creation in 2012. Separately, a monthly hiring report from payroll processor ADP shows the private sector added 325,000 jobs in December.
Those reports could raise market expectations for Friday's closely watched monthly employment report from the Labor Department. The unemployment rate and the number of nonfarm jobs created in a month often set the market's tone for a week or two after their release. The expectation is that the U.S. economy generated around 150,000 jobs in December.
Despite signs of economic strength in the U.S., investors remain concerned about the state of Europe's banks following UniCredit's announcement Wednesday that the Italian bank was selling new shares at a 69% discount to Tuesday's closing price. The Dow Jones industrial average and the Standard & Poor's 500 index crisscrossed above and then back below where they started the day in afternoon trading, reflecting investor uncertainty.
Banks are an integral part of the European debt crisis because they hold government bonds. A default or steep fall in the value of government bonds could inflict heavy losses on banks and choke off credit to the European economy. That's why regulatory authorities want Europe's banks to raise their capital reserves by $149 billion worth of euros over the next few months. The worry in the markets is that banks will have to offer sharp discounts to raise the funds.
Positive economic news propelled U.S. stocks to a big rally on Tuesday, the first trading day of 2012.
Those gains held Wednesday as automakers reported strong sales in December. Retail chains are reporting December sales Thursday. Most are positive, with Macy's (M) raising its profit outlook for its fourth quarter because of strong holiday sales. But Target (TGT) lowered its forecast in part because of weak electronics sales.
In Europe, Germany's DAX is down 0.2%. The CAC-40 has dropped 1.5%. The FTSE 100 index of leading British shares was 0.8% lower.
Earlier in Asia, Japan's Nikkei 225 index fell 0.8% to close at 8,488.71. South Korea's Kospi index lost 0.1% at 1,863.74, while Hong Kong's Hang Seng Index rose 0.5% to 18,813.41. Benchmarks in Singapore and Taiwan were also higher.
Mainland China's benchmark Shanghai Composite Index lost 1% to 2,148.45, its lowest level in almost three years. The Shenzhen Composite Index lost 3.5% to 813.99. More than 100 companies plunged to the daily limit of 10%.
3) Top financial story of the day:
The private sector added a white-hot 325,000 jobs in December, while initial claims for unemployment benefits fell again last week.
Positive Signs for Jobs Market-From The Wall Street Journal
A continued drop in the number of people seeking new unemployment benefits in the U.S. last week and a large gain in private sector employment reported by payroll giant Automatic Data Processing offered fresh signals that the labor market began to stabilize as 2011 drew to a close.
Separately, service-sector activity in the U.S. economy grew in December, at a pace similar to the prior month.
Initial jobless claims fell by 15,000 to a seasonally adjusted 372,000 in the week ended Dec. 31, the Labor Department said Thursday.
Last week was the eighth time in the past nine that new claims came in below the 400,000 mark, a positive sign as economists generally believe claims must remain consistently below that level to signal a real turnaround.
Economists surveyed by Dow Jones Newswires had forecast claims would fall by 6,000 to 375,000.
For the week ended Dec. 24, claims were revised up to 387,000 from an originally reported 381,000.
The four-week moving average of new jobless claims, which smooths out volatile weekly figures, decreased last week by 3,250 to 373,250, the lowest level since June 7, 2008.
Among those adding jobs are discount retailer Dollar General, which said this week that it will hire 1,300 in California to staff 50 new stores and a distribution center.
Even with the recent decline in those seeking new jobless benefits, unemployment remains well above historic norms.
On Friday the government will release the December unemployment rate, the broadest snapshot of the labor market. Economists forecast that the rate will tick up to 8.7% from 8.6% in November.
While fewer Americans are losing their jobs, work remains scarce in areas of the economy that suffered the largest job losses during the most recent downturn, said Joanie Ruge, chief employment analyst with staffing firm Randstad Holdings USA.
"Until we see more job creation in manufacturing and construction, the unemployment rate is likely to remain above 8%," she said ahead of Thursday's report.
The Federal Reserve predicts an unemployment rate in a range of 8.5% to 8.7% at the end of 2012.
With inflation expected to come down this year, the central bank is considering additional efforts to prop up the economy to meet its mandate to keep unemployment in check.
Continuing claims are reported with a one-week lag.
The unemployment rate for workers with unemployment insurance for the week ending Dec. 24 was 2.8%, compared with 2.9% the prior week.
The state-by-state breakdown in initial jobless claims, which is also released with a one-week lag, showed Georgia with the biggest decrease in initial claims, down 1,105 as there were fewer layoffs in the construction, service and manufacturing industries.
California saw the biggest jump in claims the week ended Dec. 24, up by 16,490 due to layoffs in the service sector.
A Labor Department official said there was nothing unusual about the latest state-level claims data.
Private Sector Adds Jobs
The private sector added a white-hot 325,000 jobs in December, according to Automatic Data Processing's monthly hiring report. The ADP report works to capture the monthly change in nonfarm private sector job changes. Forecasters had expected to see a gain of 175,000, following the revised 204,000 gain in November."December's advance was the largest monthly gain since December 2010, reflecting strong job creation across most industries," said ADP President and Chief Executive Carlos Rodriguez. "Small and medium-sized businesses were hiring at a similar pace," he said, adding that "job creation among large employers was also encouraging."
In the report, large firms added 37,000 jobs, while the service sector as a whole added 273,000 new employees. The goods-producing sector added 52,000.
The ADP report comes just ahead of Friday's release of the December nonfarm payrolls report. The Friday report is frequently the most important release in any given month's calendar of economic events, offering key insights into the health of the economy.
The challenge for financial markets is that the job data generated in the ADP report doesn't line up all that well with the data produced by the government. Economists currently expect that the improvements that have been seen in hiring over recent months will have continued into the final month of the year, with the nation expected to have added 155,000 jobs, versus the 120,000-job gain in November. The unemployment rate is seen ticking up a hair to 8.7%, from 8.6%.
Macroeconomic Advisers' Joel Prakken, who partners with ADP to create the report, was cautiously optimistic about the report. "If you put this figure in a larger context, you can still feel pretty comfortable there's a nice signal in this number," Mr. Prakken said. But the economist added "I want to be a little cautious about this number" given the magnitude of the gain.
Mr. Prakken noted it's entirely possible seasonal factors distorted the December number and made it look better than it should have. But he said the overall direction of the number is undeniable, and it's possible the unemployment rate will fall further from what is now a 8.6% level. Mr. Prakken did note that government hiring isn't captured in the ADP report, and that it may have a negative influence on the national hiring data due on Friday.
The very large job gain reported for December caught Wall Street off guard. "Nothing is at face value when it comes to ADP," said Eric Green of TD Securities. "We were bullish on the number Friday, comfortably above consensus, but not this bullish and do not expect a payroll gain tomorrow to reflect this ADP number," he said.
Nonmanufacturing Sector Expands
The Institute for Supply Management reported Thursday that its index of non-manufacturing performance moved to a reading of 52.6 from 52.0 in November. The non-manufacturing business activity/production index was steady at 56.2. Forecasters had expected the overall reading to hit 53.0 for the month.Readings in the ISM survey above 50 indicate growth, and the higher the number, the more broad-based the gain. The numbers have nothing to say about the magnitude of growth, however. The non-manufacturing index is comprised mostly, but not exclusively, of service sector activity, which makes up most of America's economic output.
The report arrives at a time of growing optimism over the path of U.S. growth. Earlier this week, the ISM reported that factory activity showed a modest increase during December.
In the non-manufacturing report, employment contracted at a slower pace, with the jobs index at 49.4, from 48.9. Meanwhile, inflation rose at a steady pace, with the prices index moving to 61.2, versus 62.5 the month before.
4) Quote of the Day from Dave Ramsey.com:
In the middle of difficulty lies opportunity. — Albert Einstein
Wednesday, January 4, 2012
Financial Headline News for Wednesday 1/4
1) Phil's Financial Tip of the Day:
As Dave Ramsey always says, Personal Finance is 80% behavior and only 20% mathematical head knowledge. So anyone can do this-don't be intimidated! Good Luck in your New Year of Personal Finance goal setting.
Great common sense advice for the New Year.
50 Ways to Improve Your Finances in 2012-From Financially Fit
A guide to mastering your money in the new year
A new year offers a fresh start. Whether you're ready to ramp up your earning power, start saving more money, or manage what you have more effectively, this 50-step guide is designed to help you improve every aspect of your financial life, from overall security to specific saving and spending strategies.
1. Focus on the "why" of your goals instead of the "how." Planning exactly how you will reach a goal, such as saving more money, can actually make it harder to reach that goal, according to research by Julia Belyavsky Bayuk, an assistant professor at the University of Delaware. She found that focusing more on the motivation behind a goal instead of the specifics of how it will be achieved can increase the likelihood of success. That's partly because having a more "abstract" mindset can help people deal with unexpected challenges along the way.
2. Rethink your relationship with money. For those struggling to make better money decisions, life coach Christine Hassler suggests thinking about money as if it's a person. "How's your relationship with George?" she asks, referring to President George Washington's face on the $1 bill. In her book 20 Something, 20 Everything, she encourages readers to first examine their history with money. "If they don't excavate what they believe and their sense of worth, they are unable to progress," she explains. That history includes one's financial situation growing up and patterns of spending. The first step to fixing a dysfunctional relationship with money is to acknowledge its existence.
3. Protect your privacy. Whenever someone asks for your Social Security number, question if it's necessary to share it. Never give it to a solicitor on the telephone or in an email, and if you ever notice a suspicious charge on your credit card, follow up with your card company—it could be the first sign of identity theft.
[See also: 7 Deadly Financial Sins]
4. Plan a comeback. A lot of people have struggled over the past few years, but that downswing doesn't have to be permanent. Jude Boudreaux, who now works as a certified financial planner in New Orleans, turned his life around after running up $5,000 in credit card debt in college. He did it by ruthlessly cutting out "extras" in his budget so he could focus on his bigger financial goals, including getting out of debt. Today, Boudreaux says his past struggles are an asset, since he's living proof to clients that it is possible to make a complete comeback.
5. Visualize your future self. People who feel connected to their future identities are more likely to delay gratification, according to research from the Columbia Business School and University of Chicago Booth School of Business. The researchers offer a relatively simple way to do this: Take a moment or two to meditate on your future self, and just how similar it is to your current self.
6. Get organized. Financial accounts often come with monstrous amounts of paperwork. You'll probably need to hang on to important documents (some states require taxpayers to keep up to 10 years of filings on hand), but much of your old paperwork belongs in the trash or the shredder if it has valuable information on it, such as bank account numbers. Store your most important documents, such as birth and marriage certificates, in an archival box or a locked metal file cabinet that's separate from your day-to-day files.
7. Create a paperwork system. Keeping all of your paperwork in one place can be step one to a better financial life. Brooke West, a private financial adviser and vice president at SunTrust, suggests a three ring-binder, which she calls her "financial bible." She uses a new one every year to hold all of her paperwork. She has tabs for bank statements, Social Security benefits, estate planning, pension and retirement benefits, investments, and credit reports. For a few paper-heavy categories, such as flex-spending receipts, she has separate files.
8. Live below your means. Danny Kofke, a teacher and father of two, manages to live well on his $40,000-a-year salary. In his book, A Simple Book of Financial Wisdom, he explains that he does it by following a pretty simple strategy: Living below his means. He doesn't buy what he cannot afford, even when he wants to, and avoids debt at all costs.
[See also: What Failure to Extend the Tax Cut Means for Consumers]
9. Coordinate with your partner. Not talking about money is one of the biggest money mistakes couples make. Couples considering moving in together or marriage can save themselves a lot of trouble by talking about hot-button topics such as how to share household expenses, credit card debt, and anticipated future expenses. Don't forget to bring up your long-term goals, too, which can make the discussion a little more romantic. Do you want to swim with dolphins in the Bahamas? Backpack around Europe together? Agreeing on common goals makes it easier to save.
10. Pick a better bank. There's no one-size-fits-all when it comes to banks anymore, which means consumers have to do their own research to pick the best fit for them. In general, says Today Show financial editor Jean Chatzky, larger banks offer more ATMsFindABetterBank.com, which makes it easy to search by ZIP code. Other websites, including Bankrate.com and Google Advisor, also offer free customized searches.
11. Automate savings. Online banking makes this technique easy: Sign up for monthly transfers into a brokerage or savings account. You can also transfer funds directly from your paycheck so you never even see the money, which means you won't miss it. Check in with your human resources department—you might be able to set up an automatic savings account through your paycheck in addition to your automatic retirement savings.
12. Take advantage of online tools. Mint.com lets users upload account information and get immediate insight into where their money is going. It's free and user-friendly, and comes with a smartphone app that lets you track your budget wherever you are.
13. Create stronger passwords. Scam artists prey on those with easy-to-guess passwords. Avoid becoming a victim by never using the same password on multiple sites, avoiding common words or names, and using a long password that only you know, such as a sentence.
14. Bank safely online. With more customers managing their money through online accounts, mistakes that lead to vulnerability are also more common. Don't "friend" strangers online, and beware of sharing any personal information publicly that could be used to guess your passwords. Take care when entering passwords on smartphones, too, because such devices generally lack the anti-virus software that's more common on computers. If you do notice anything suspicious, contact your bank right away.
15. Watch television for free. From the network news to serialized primetime shows to cable programming, the show you want can almost always be found online. In most cases, all the viewer has to do to access a show is watch a short 30-second advertisement before the opening scenes, or a longer two-minute ad where a commercial break would normally be. Not a bad price, considering that most of us watch ads anyway when we tune into our expensive cable channels. Check out Hulu.com, iTunes, and network websites.
16. Travel for free. By taking advantage of credit card reward programs as well as airline mileage, Brad Wilson, 30, earned a free trip to Australia and New Zealand, valued at around $40,000. "It turns out there are a lot more opportunities than people realize," he says. He suggests actively seeking out deals, layering them on top of each other, and staying organized.
17. Move in with family. The Pew Research Center recently found that there are more multigenerational U.S. households today than at almost any point in modern history, with a total of about 51.4 million Americans living with relatives. That's about 16.7 percent of all Americans, the highest percentage since the 1950s. (During World War II, shared housing was more common, with about 1 in 4 Americans living in a multigenerational household.) The report likens the phenomenon to an "anti-poverty program" that Americans are enacting to insulate themselves from the dark side of the Great Recession.
18. But don't ruin each other's finances. Parents are often pressed for cash, too, especially as they near retirement, which means they have to watch out for their own finances. Budgeting for any support can help, as can exchanging non-financial help, such as shared meals and networking advice.
19. Waste less money on food. Jonathan Bloom, author of American Wasteland, estimates that Americans waste at least 160 billion pounds of food each year. To minimize that, he suggests shopping more frequently and buying less on each trip to the store, and maintaining an uncluttered fridge so you don't forget about items that will soon expire.
20. Become a better cook. Sometimes you have to spend money to save money. Nowhere is that truer than in the kitchen, where investing in a few key pieces of hardware can help you cook better, faster, and cheaper. And anything that makes your food taste better and gets it on the table quickly can lessen the temptation to order budget-busting take-out. Consider investing in a slow cooker to make meals even easier.
21. Use less energy. Small changes, like closing doors to unused rooms or turning off the air conditioner during the day, can make a serious dent in utility bills. So can unplugging appliances, turning off lights, and shutting down computers at night. Even televisions can use power when they're turned off, so unplugging them when they're not in use saves energy. A $30 power strip, called the Smart Strip, automatically cuts power to devices that don't need it when they're off, such as a DVD player, while maintaining power to those that do, such as a cable box.
22. Reduce your utility bills. Making sure your home is properly insulated can save you money on heating and cooling costs. Using a programmable thermostat so that the temperature automatically rises (in the summer) and falls (in the winter) when no one is home during the day can yield annual savings of about 30 percent. While some 25 million households own programmable thermostats, only half actually use them.
23. Forget the Joneses. With Facebook making it easier than ever to compare your own material status to others, it can be easy to always feel one step behind. But it's easy to be unaware of the debt supporting a friend's lifestyle, or their own private financial stresses. Cultivating a sense of gratitude can help ameliorate feelings of jealousy.
24. Take advantage of job benefits. If your employer offers flexible-spending accounts, gym-fee reimbursements, or other perks, be sure to take advantage of them. The human resources department can help connect you with the right paperwork.
25. Plan ahead with big-ticket purchases. Big purchases, such as cars, homes, and vacations, often come with major hidden costs. Homes, for example, can lose value or spring a leak in the roof. Cars depreciate and break down. Waiting to buy until you have the cash reserves to handle those unexpected costs can prevent a lot of financial stress later.
26. Stop receiving email sales alerts from your favorite retailers. Electronic junk mail might not carry the same environmental impact, but it can still convince you to spend money on items you don't need. Unsubscribe to retailer alerts to avoid the temptation.
27. Take advantage of your bank's free tools. Banks are increasingly offering easy ways to track your spending online. If your bank offers a free tool, use it to see where your money is going and where you can cut back.
28. Negotiate, even in this economy. Even if their salary itself is fixed, employees often have room to negotiate on other benefits, such as flexible work hours or vacation, which can result in a more appealing employment package. In the worst-case scenario, the request will be denied, but many employers expect some back-and-forth during the negotiation process.
29. Pick up a few side jobs. Many people don't realize they have valuable skills that others are willing to pay for, such as teaching a second language or even craft skills. To get ideas for how to earn extra money, check out the services section on Craigslist and see what people are advertising—editing, gardening, and event planning. Earning just a few hundred dollars a month can help get you back on your feet, plus you'll get valuable job experience and the possible start of a successful small business that you can continue to grow.
30. Develop a back-up plan. In today's economy, no job is 100-percent secure. Create a list of steps you would take if you were to lose your job, even though you hope never to have to use it. Having a Plan B can give you peace of mind as well as a practical "to-do" list if you ever face the shock of an unexpected job loss.
31. Save up before quitting your job. Even in this economy, between 1.5 million and 2 million people quit their jobs each month. Storing up enough savings to pay for a year's worth of expenses can make that transition easier. Of course, toxic or depressing work environments don't always allow for that kind of flexibility.
32. Get famous. Boosting your own name recognition can lead to a salary increase in almost any profession, according to public relations experts Maggie and Jay Jessup, authors of Fame 101. They suggest choosing a specialty within your field, then gaining notoriety as the go-to expert by taking advantage of social media channels as well as free publicity by being quoted in articles.
33. Invest in your career—even when you're being frugal everywhere else. Investing in a career coach or development course can help you snag a promotion, get "unstuck" from a career rut, or transition into your dream job. The price of one-on-one coaching typically starts at about $200 an hour, but less-formal advice can come from meeting with more experienced colleagues over lunch or coffee.
34. Embrace DIY projects. From making candles from scratch to growing your own potatoes, crafty projects can save money throughout the year. In their book The Bust DIY Guide to Life, Laurie Henzel and Debbie Stoller explain how to sew, grow, and craft your way through dozens of do-it-yourself projects.
35. Reduce your tax load. Have you moved to take a new job? Do you have business expenses? Or child care that allows parents to look for work? If so, you are probably eligible for certain tax deductions. The IRS website, irs.gov, offers detailed guidance on what's allowed—and what's not.
36. Pay off expensive debt. If you're carrying around high-interest credit card debt, paying it off can save you a lot of money in the form of fees and interest. If you already have an emergency savings account and have the funds to pay off the high-interest rate debt, consider doing so.
37. Build a strong credit history. Some people avoid debt and credit cards to such a degree that they fail to build up a strong credit history, which can make it hard to get a loan when they want it, such as a mortgage. Recent college grads with little credit history, for example, can get penalized when they apply for a mortgage or auto loan. Lenders often want to see that you have experience taking on credit and paying your bills on time. As Rod Griffin, public education director for Experian puts it, "You need to demonstrate over time that you handle your debts well."
38. Improve your credit score. The easiest way to do this is by making steady, on-time payments every month and otherwise keeping your accounts in good standing. Get your free credit report once a year at AnnualCreditReport.com to check for any mistakes (and fix them).
39. Choose the best credit card for you. If you pay your balance off each month, you should have a card that gives you rewards points. If you carry debt, just focus on getting the card with the lowest interest rate. Most people have multiple cards that aren't suited to their needs. Pick the one that fits you best and stop using the others. Don't close them, though, because that can hurt your credit score.
40. Check up on your insurance policies. Do you have the auto insurance, renters insurance, and life insurance that you need? According to insurer Allstate, Two in three renters skip insurance altogether, even though most could benefit from the relatively cheap protection. Life insurance is another awkward topic since no one wants to talk about death. But many people are under-insured, which puts their families at risk. Review the insurance that you have and decide whether you have the right amount.
41. Host affordable (and fun) parties. Socializing with friends doesn't have to be expensive. In their new book, Plan to Party, professional party planners Elizabeth Mascali and Dawn Sandomeno suggest saving on invitations by emailing them and splurging on a few special touches, such as adding fresh lemons to water and other drinks or berries as a cocktail garnish.
42. Give better gifts. Surveys show that most Americans say they want to spend less and give more meaningful presents. When birthdays or other events come up, think about how you can give an experience, such as an afternoon at a museum or conversation over tea, instead of things.
43. Celebrate friends' milestones without hurting your bank account. Bridesmaids are famous for their self-sacrifice. Not only do they have to wear the dress, but they are often expected to host events in honor of the bride, travel to the wedding and related events, and give the happy couple wedding gifts. The WeddingChannel.com recently reported that it costs more than $1,600, on average, to serve as a bridesmaid. You can avoid that by splitting costs with friends by room-sharing at the wedding and giving a more personal gift than one on the registry.
44. Create an estate plan. You don't need to be rich and famous to need an estate plan, although celebrity estate planning mistakes hold a few lessons for all of us. Amy Winehouse left her affairs in remarkable order, despite having a relatively complicated personal life, including an ex-husband. Michael Jackson created some complications for his heirs by choosing his elderly mother as a guardian for his young children.
45. Decide what type of investor you want to be. If you're like most people, you probably want to skip stock-picking and put your money in low-cost index funds. Create a diversified portfolio, with longer-term savings in more aggressive investments (such as an index fund that tracks the S&P 500) and shorter-term savings in safer spots such as money market funds.
46. Run some numbers. Most people fail to calculate exactly how much they're on track to save, or how much they'll need, in retirement. Check out the retirement calculators available through your financial institution (Fidelity, T.D. Ameritrade, Transamerica, and T. Rowe Price have them, among others) or use free calculators from Bankrate.com. Experiment with different rates of returns, inflation rates, tax rates, and lifetime expectancy, since no one can predict those factors with any accuracy.
47. Get a detailed home inspection before buying. Home inspections, it turns out, are much more limited than many first-time buyers realize. "The purpose of a home inspection is to look for material defects of a property—things that are unsafe, not working, or that create a hazard," explains Kurt Salomon, president of the American Society of Home Inspectors and an inspector based in Salt Lake City. Home buyers, however, "think we can see through walls and predict the future," he says. If you have specific concerns, such as pool safety or childproofing, consider working with a specialist before buying.
48. Start saving for college. The cost of college can be daunting, but several new strategies make it a little easier to manage. In addition to 529 college savings accounts, which allow parents to invest after-tax money that then grows tax-free, parents can also opt for prepaid tuition plans, which lock in prices today, as well as employer-sponsored college savings plans.
49. Pass on money lessons. Many parents say they feel more comfortable talking about drugs and sex than money. But children learn a lot from their parents' financial habits, often by example. Parents can turn to websites such as Mymoney.gov, AmericaSaves.org, ING Direct's Planet Orange, and SchwabMoneyWise.com for help.
50. Give a smart allowance. Alisa T. Weinstein, author of Earn It, Learn It: Teach Your Child the Value of Money, Work, and Time Well Spent, suggests teaching children to work for their money—in a fun way. She suggests connecting the allowance with tasks related to various careers, such as being a travel agent or chef. Travel-agent tasks include reporting on a destination in an appealing way, creating a brochure, and for older children, calculating exchange rates. "This way, the child is making the connection between effort and money, and the feeling that you worked hard for something. If you can capture that, then you're much more likely to have a child who grows up and can find emotional and financial fulfillment in their careers," says Weinstein.
2) In the Markets today:
Stocks finished little changed after rallying sharply in the previous session, as encouraging results from auto makers helped offset euro-zone liquidity concerns.
Wall Street flat as market brushes off Europe concerns-From Reuters
Major U.S. stock indexes were little changed in a low-volume session on Wednesday, but some investors were encouraged to see equities avoid a sell-off amid lingering euro zone's debt problems.
Indexes held on to the previous day's large gains even as the euro dropped sharply against the dollar.
Notably, U.S. banks held up well, even though bad news in Europe centered around the difficulties for some European lenders.
Tight credit markets are making it expensive for European banks to raise capital and for euro-zone countries to refinance debt. The latest sign of stress came from Italy's biggest bank, UniCredit, which fell nearly 10 percent after it offered to sell 7.5 billion euros ($9.8 billion) in shares at a steep discount to shore up its balance sheet.
A gauge of European bank shares dropped 1.6 percent, but in New York the KBW bank index added 0.34 percent.
"Some of what's been going on in the last weeks is the U.S. is starting to delink from Europe," said Jim Paulsen, chief investment officer at Wells Capital Management in Minneapolis.
"Not that we've totally isolated ourselves, but the fact you're seeing more days when the euro is off and the market here is up is evidence of some delinking," he said. "If the U.S. economy is growing again, it's much less vulnerable to external shocks."
Investors were encouraged by a sharp rise in new orders for U.S. factory goods in November, further evidence the economy is recovering.
The euro, which moved in lockstep with equities for most of the past quarter, slumped to its lowest level against the dollar in nearly a week.
The once-tight relationship between the S&P 500 and the euro continues to fray. The 50-day correlation coefficient between S&P e-mini futures and the single currency fell to 0.22, its lowest since mid-September. A perfect correlation score is 1; a score of 0 indicates no correlation.
The Dow Jones industrial average gained 21.04 points, or 0.17 percent, to 12,418.42. The S&P 500 Index edged up 0.24 point, or 0.02 percent, to 1,277.30. The Nasdaq Composite dipped 0.36 point, or 0.01 percent, to 2,648.36.
U.S. new vehicle sales released on Wednesday showed automakers ended the year with strong sales, but they forecast lower growth in 2012.
GM shares rose 0.5 percent to $21.15, while Ford added 1.5 percent to $11.30.
Netflix Inc, down more than 60 percent last year, led consumer stocks higher with a 11.4 percent rise to $80.45. The S&P consumer discretionary sector rose 0.7 percent.
Yahoo Inc shares fell 3.1 percent to $15.78 after it named PayPal president Scott Thompson as its chief executive, taking over on January 9 from interim CEO Tim Morse, who will resume his role as chief financial officer.
AT&T Inc agreed on Tuesday to pay TiVo Inc a minimum of $215 million and additional monthly licensing fees to settle a patent infringement dispute. AT&T shares gained 0.2 percent to $30.43, and TiVo jumped 10.1 percent to $9.82.
On the New York Stock Exchange 1,541 issues declined and 1,465 advanced, and on Nasdaq 1,521 declined and 963 advanced.
About 6.23 billion shares changed hands on the NYSE, Nasdaq and Amex, compared with last year's daily average of about 7.84 billion shares.
3) Top financial story of the day:
Retailers are expected to report healthy sales gains in December, as a last-minute flurry of shoppers scooped up marked-down merchandise.
Tallying the Christmas Rush: Sales Gain, Profit Pain?-From CNBC
So after months of speculating how retailers would fare during the holiday season, investors will get some hard-and-fast answers Thursday, when more than 20 retail chains report their monthly sales for December.
Retailers are expected to report healthy sales gains in December, as a last-minute flurry of shoppers scooped up marked-down merchandise.
On average, analysts are estimating a 3.4 percent gain in sales at stores open at least 12 months, year-over-year, according to the Thomson Reuters Same-Store Sales Index.
If this proves true, the gain would actually top the group's increase last December of 3.1 percent.
According to Thomson Reuters, discounters in the group should post the strongest sales gains on a percentage basis, offering yet another sign of consumers' thrifty attitudes.
Despite the optimistic attitudes regarding sales, there remains some concern about the price retailers paid to woo consumers. Many retailers slashed prices during the holiday season and extended their hours to lure in consumers.
The strategy appears to have worked. Earlier Wednesday, the International Council of Shopping Centers and Goldman Sachs showed the month ended on a high note, with sales for the week ended Dec. 31 up 5.3 percent, which was the fastest weekly gain since July 11, 2010.
However, Thursday's upcoming batch of monthly sales reports may offer insight into whether the discounts retailers offered plus the extended store hours squeezed their profits.
The late Christmas rush may make all the difference to retailers, according to some analysts.
In a research note, Stifel Nicolaus analyst Richard Jaffe said the high-volume sales periods (and the lulls) continue to grow "more pronounced" in retail. Still, Jaffe was encouraged that while promotions continued, the level for most retailers he follows did not accelerate.
Ahead of Thursday's reports many retail stocks were trading lower. Among them were discounter Target (NYSE: TGT - News), luxury retailer Saks (NYSE: SKS - News), and department store JCPenney (NYSE: JCP - News). Shares of Wal-Mart Stores , the nation's largest retailer, also fell
Wednesday, although the retailer doesn't report its same-store sales on a monthly basis.
But other retail stocks were posting gains, including Gap (NYSE: GPS - News), which has been struggling to turn around its business; TJX Cos. (NYSE: TJX - News), the parent of off-price retailers TJ Maxx and Marshall's; and Limited Brands (NYSE: LTD - News), the parent of Victoria's Secret.
4) Quote of the Day from Dave Ramsey.com:
Our plans miscarry because they have no aim. When a man does not know what harbor he is making for, no wind is the right wind. — Seneca
As Dave Ramsey always says, Personal Finance is 80% behavior and only 20% mathematical head knowledge. So anyone can do this-don't be intimidated! Good Luck in your New Year of Personal Finance goal setting.
Great common sense advice for the New Year.
50 Ways to Improve Your Finances in 2012-From Financially Fit
A guide to mastering your money in the new year
A new year offers a fresh start. Whether you're ready to ramp up your earning power, start saving more money, or manage what you have more effectively, this 50-step guide is designed to help you improve every aspect of your financial life, from overall security to specific saving and spending strategies.
1. Focus on the "why" of your goals instead of the "how." Planning exactly how you will reach a goal, such as saving more money, can actually make it harder to reach that goal, according to research by Julia Belyavsky Bayuk, an assistant professor at the University of Delaware. She found that focusing more on the motivation behind a goal instead of the specifics of how it will be achieved can increase the likelihood of success. That's partly because having a more "abstract" mindset can help people deal with unexpected challenges along the way.
2. Rethink your relationship with money. For those struggling to make better money decisions, life coach Christine Hassler suggests thinking about money as if it's a person. "How's your relationship with George?" she asks, referring to President George Washington's face on the $1 bill. In her book 20 Something, 20 Everything, she encourages readers to first examine their history with money. "If they don't excavate what they believe and their sense of worth, they are unable to progress," she explains. That history includes one's financial situation growing up and patterns of spending. The first step to fixing a dysfunctional relationship with money is to acknowledge its existence.
3. Protect your privacy. Whenever someone asks for your Social Security number, question if it's necessary to share it. Never give it to a solicitor on the telephone or in an email, and if you ever notice a suspicious charge on your credit card, follow up with your card company—it could be the first sign of identity theft.
[See also: 7 Deadly Financial Sins]
4. Plan a comeback. A lot of people have struggled over the past few years, but that downswing doesn't have to be permanent. Jude Boudreaux, who now works as a certified financial planner in New Orleans, turned his life around after running up $5,000 in credit card debt in college. He did it by ruthlessly cutting out "extras" in his budget so he could focus on his bigger financial goals, including getting out of debt. Today, Boudreaux says his past struggles are an asset, since he's living proof to clients that it is possible to make a complete comeback.
5. Visualize your future self. People who feel connected to their future identities are more likely to delay gratification, according to research from the Columbia Business School and University of Chicago Booth School of Business. The researchers offer a relatively simple way to do this: Take a moment or two to meditate on your future self, and just how similar it is to your current self.
6. Get organized. Financial accounts often come with monstrous amounts of paperwork. You'll probably need to hang on to important documents (some states require taxpayers to keep up to 10 years of filings on hand), but much of your old paperwork belongs in the trash or the shredder if it has valuable information on it, such as bank account numbers. Store your most important documents, such as birth and marriage certificates, in an archival box or a locked metal file cabinet that's separate from your day-to-day files.
7. Create a paperwork system. Keeping all of your paperwork in one place can be step one to a better financial life. Brooke West, a private financial adviser and vice president at SunTrust, suggests a three ring-binder, which she calls her "financial bible." She uses a new one every year to hold all of her paperwork. She has tabs for bank statements, Social Security benefits, estate planning, pension and retirement benefits, investments, and credit reports. For a few paper-heavy categories, such as flex-spending receipts, she has separate files.
8. Live below your means. Danny Kofke, a teacher and father of two, manages to live well on his $40,000-a-year salary. In his book, A Simple Book of Financial Wisdom, he explains that he does it by following a pretty simple strategy: Living below his means. He doesn't buy what he cannot afford, even when he wants to, and avoids debt at all costs.
[See also: What Failure to Extend the Tax Cut Means for Consumers]
9. Coordinate with your partner. Not talking about money is one of the biggest money mistakes couples make. Couples considering moving in together or marriage can save themselves a lot of trouble by talking about hot-button topics such as how to share household expenses, credit card debt, and anticipated future expenses. Don't forget to bring up your long-term goals, too, which can make the discussion a little more romantic. Do you want to swim with dolphins in the Bahamas? Backpack around Europe together? Agreeing on common goals makes it easier to save.
10. Pick a better bank. There's no one-size-fits-all when it comes to banks anymore, which means consumers have to do their own research to pick the best fit for them. In general, says Today Show financial editor Jean Chatzky, larger banks offer more ATMsFindABetterBank.com, which makes it easy to search by ZIP code. Other websites, including Bankrate.com and Google Advisor, also offer free customized searches.
11. Automate savings. Online banking makes this technique easy: Sign up for monthly transfers into a brokerage or savings account. You can also transfer funds directly from your paycheck so you never even see the money, which means you won't miss it. Check in with your human resources department—you might be able to set up an automatic savings account through your paycheck in addition to your automatic retirement savings.
12. Take advantage of online tools. Mint.com lets users upload account information and get immediate insight into where their money is going. It's free and user-friendly, and comes with a smartphone app that lets you track your budget wherever you are.
13. Create stronger passwords. Scam artists prey on those with easy-to-guess passwords. Avoid becoming a victim by never using the same password on multiple sites, avoiding common words or names, and using a long password that only you know, such as a sentence.
14. Bank safely online. With more customers managing their money through online accounts, mistakes that lead to vulnerability are also more common. Don't "friend" strangers online, and beware of sharing any personal information publicly that could be used to guess your passwords. Take care when entering passwords on smartphones, too, because such devices generally lack the anti-virus software that's more common on computers. If you do notice anything suspicious, contact your bank right away.
15. Watch television for free. From the network news to serialized primetime shows to cable programming, the show you want can almost always be found online. In most cases, all the viewer has to do to access a show is watch a short 30-second advertisement before the opening scenes, or a longer two-minute ad where a commercial break would normally be. Not a bad price, considering that most of us watch ads anyway when we tune into our expensive cable channels. Check out Hulu.com, iTunes, and network websites.
16. Travel for free. By taking advantage of credit card reward programs as well as airline mileage, Brad Wilson, 30, earned a free trip to Australia and New Zealand, valued at around $40,000. "It turns out there are a lot more opportunities than people realize," he says. He suggests actively seeking out deals, layering them on top of each other, and staying organized.
17. Move in with family. The Pew Research Center recently found that there are more multigenerational U.S. households today than at almost any point in modern history, with a total of about 51.4 million Americans living with relatives. That's about 16.7 percent of all Americans, the highest percentage since the 1950s. (During World War II, shared housing was more common, with about 1 in 4 Americans living in a multigenerational household.) The report likens the phenomenon to an "anti-poverty program" that Americans are enacting to insulate themselves from the dark side of the Great Recession.
18. But don't ruin each other's finances. Parents are often pressed for cash, too, especially as they near retirement, which means they have to watch out for their own finances. Budgeting for any support can help, as can exchanging non-financial help, such as shared meals and networking advice.
19. Waste less money on food. Jonathan Bloom, author of American Wasteland, estimates that Americans waste at least 160 billion pounds of food each year. To minimize that, he suggests shopping more frequently and buying less on each trip to the store, and maintaining an uncluttered fridge so you don't forget about items that will soon expire.
20. Become a better cook. Sometimes you have to spend money to save money. Nowhere is that truer than in the kitchen, where investing in a few key pieces of hardware can help you cook better, faster, and cheaper. And anything that makes your food taste better and gets it on the table quickly can lessen the temptation to order budget-busting take-out. Consider investing in a slow cooker to make meals even easier.
21. Use less energy. Small changes, like closing doors to unused rooms or turning off the air conditioner during the day, can make a serious dent in utility bills. So can unplugging appliances, turning off lights, and shutting down computers at night. Even televisions can use power when they're turned off, so unplugging them when they're not in use saves energy. A $30 power strip, called the Smart Strip, automatically cuts power to devices that don't need it when they're off, such as a DVD player, while maintaining power to those that do, such as a cable box.
22. Reduce your utility bills. Making sure your home is properly insulated can save you money on heating and cooling costs. Using a programmable thermostat so that the temperature automatically rises (in the summer) and falls (in the winter) when no one is home during the day can yield annual savings of about 30 percent. While some 25 million households own programmable thermostats, only half actually use them.
23. Forget the Joneses. With Facebook making it easier than ever to compare your own material status to others, it can be easy to always feel one step behind. But it's easy to be unaware of the debt supporting a friend's lifestyle, or their own private financial stresses. Cultivating a sense of gratitude can help ameliorate feelings of jealousy.
24. Take advantage of job benefits. If your employer offers flexible-spending accounts, gym-fee reimbursements, or other perks, be sure to take advantage of them. The human resources department can help connect you with the right paperwork.
25. Plan ahead with big-ticket purchases. Big purchases, such as cars, homes, and vacations, often come with major hidden costs. Homes, for example, can lose value or spring a leak in the roof. Cars depreciate and break down. Waiting to buy until you have the cash reserves to handle those unexpected costs can prevent a lot of financial stress later.
26. Stop receiving email sales alerts from your favorite retailers. Electronic junk mail might not carry the same environmental impact, but it can still convince you to spend money on items you don't need. Unsubscribe to retailer alerts to avoid the temptation.
27. Take advantage of your bank's free tools. Banks are increasingly offering easy ways to track your spending online. If your bank offers a free tool, use it to see where your money is going and where you can cut back.
28. Negotiate, even in this economy. Even if their salary itself is fixed, employees often have room to negotiate on other benefits, such as flexible work hours or vacation, which can result in a more appealing employment package. In the worst-case scenario, the request will be denied, but many employers expect some back-and-forth during the negotiation process.
29. Pick up a few side jobs. Many people don't realize they have valuable skills that others are willing to pay for, such as teaching a second language or even craft skills. To get ideas for how to earn extra money, check out the services section on Craigslist and see what people are advertising—editing, gardening, and event planning. Earning just a few hundred dollars a month can help get you back on your feet, plus you'll get valuable job experience and the possible start of a successful small business that you can continue to grow.
30. Develop a back-up plan. In today's economy, no job is 100-percent secure. Create a list of steps you would take if you were to lose your job, even though you hope never to have to use it. Having a Plan B can give you peace of mind as well as a practical "to-do" list if you ever face the shock of an unexpected job loss.
31. Save up before quitting your job. Even in this economy, between 1.5 million and 2 million people quit their jobs each month. Storing up enough savings to pay for a year's worth of expenses can make that transition easier. Of course, toxic or depressing work environments don't always allow for that kind of flexibility.
32. Get famous. Boosting your own name recognition can lead to a salary increase in almost any profession, according to public relations experts Maggie and Jay Jessup, authors of Fame 101. They suggest choosing a specialty within your field, then gaining notoriety as the go-to expert by taking advantage of social media channels as well as free publicity by being quoted in articles.
33. Invest in your career—even when you're being frugal everywhere else. Investing in a career coach or development course can help you snag a promotion, get "unstuck" from a career rut, or transition into your dream job. The price of one-on-one coaching typically starts at about $200 an hour, but less-formal advice can come from meeting with more experienced colleagues over lunch or coffee.
34. Embrace DIY projects. From making candles from scratch to growing your own potatoes, crafty projects can save money throughout the year. In their book The Bust DIY Guide to Life, Laurie Henzel and Debbie Stoller explain how to sew, grow, and craft your way through dozens of do-it-yourself projects.
35. Reduce your tax load. Have you moved to take a new job? Do you have business expenses? Or child care that allows parents to look for work? If so, you are probably eligible for certain tax deductions. The IRS website, irs.gov, offers detailed guidance on what's allowed—and what's not.
36. Pay off expensive debt. If you're carrying around high-interest credit card debt, paying it off can save you a lot of money in the form of fees and interest. If you already have an emergency savings account and have the funds to pay off the high-interest rate debt, consider doing so.
37. Build a strong credit history. Some people avoid debt and credit cards to such a degree that they fail to build up a strong credit history, which can make it hard to get a loan when they want it, such as a mortgage. Recent college grads with little credit history, for example, can get penalized when they apply for a mortgage or auto loan. Lenders often want to see that you have experience taking on credit and paying your bills on time. As Rod Griffin, public education director for Experian puts it, "You need to demonstrate over time that you handle your debts well."
38. Improve your credit score. The easiest way to do this is by making steady, on-time payments every month and otherwise keeping your accounts in good standing. Get your free credit report once a year at AnnualCreditReport.com to check for any mistakes (and fix them).
39. Choose the best credit card for you. If you pay your balance off each month, you should have a card that gives you rewards points. If you carry debt, just focus on getting the card with the lowest interest rate. Most people have multiple cards that aren't suited to their needs. Pick the one that fits you best and stop using the others. Don't close them, though, because that can hurt your credit score.
40. Check up on your insurance policies. Do you have the auto insurance, renters insurance, and life insurance that you need? According to insurer Allstate, Two in three renters skip insurance altogether, even though most could benefit from the relatively cheap protection. Life insurance is another awkward topic since no one wants to talk about death. But many people are under-insured, which puts their families at risk. Review the insurance that you have and decide whether you have the right amount.
41. Host affordable (and fun) parties. Socializing with friends doesn't have to be expensive. In their new book, Plan to Party, professional party planners Elizabeth Mascali and Dawn Sandomeno suggest saving on invitations by emailing them and splurging on a few special touches, such as adding fresh lemons to water and other drinks or berries as a cocktail garnish.
42. Give better gifts. Surveys show that most Americans say they want to spend less and give more meaningful presents. When birthdays or other events come up, think about how you can give an experience, such as an afternoon at a museum or conversation over tea, instead of things.
43. Celebrate friends' milestones without hurting your bank account. Bridesmaids are famous for their self-sacrifice. Not only do they have to wear the dress, but they are often expected to host events in honor of the bride, travel to the wedding and related events, and give the happy couple wedding gifts. The WeddingChannel.com recently reported that it costs more than $1,600, on average, to serve as a bridesmaid. You can avoid that by splitting costs with friends by room-sharing at the wedding and giving a more personal gift than one on the registry.
44. Create an estate plan. You don't need to be rich and famous to need an estate plan, although celebrity estate planning mistakes hold a few lessons for all of us. Amy Winehouse left her affairs in remarkable order, despite having a relatively complicated personal life, including an ex-husband. Michael Jackson created some complications for his heirs by choosing his elderly mother as a guardian for his young children.
45. Decide what type of investor you want to be. If you're like most people, you probably want to skip stock-picking and put your money in low-cost index funds. Create a diversified portfolio, with longer-term savings in more aggressive investments (such as an index fund that tracks the S&P 500) and shorter-term savings in safer spots such as money market funds.
46. Run some numbers. Most people fail to calculate exactly how much they're on track to save, or how much they'll need, in retirement. Check out the retirement calculators available through your financial institution (Fidelity, T.D. Ameritrade, Transamerica, and T. Rowe Price have them, among others) or use free calculators from Bankrate.com. Experiment with different rates of returns, inflation rates, tax rates, and lifetime expectancy, since no one can predict those factors with any accuracy.
47. Get a detailed home inspection before buying. Home inspections, it turns out, are much more limited than many first-time buyers realize. "The purpose of a home inspection is to look for material defects of a property—things that are unsafe, not working, or that create a hazard," explains Kurt Salomon, president of the American Society of Home Inspectors and an inspector based in Salt Lake City. Home buyers, however, "think we can see through walls and predict the future," he says. If you have specific concerns, such as pool safety or childproofing, consider working with a specialist before buying.
48. Start saving for college. The cost of college can be daunting, but several new strategies make it a little easier to manage. In addition to 529 college savings accounts, which allow parents to invest after-tax money that then grows tax-free, parents can also opt for prepaid tuition plans, which lock in prices today, as well as employer-sponsored college savings plans.
49. Pass on money lessons. Many parents say they feel more comfortable talking about drugs and sex than money. But children learn a lot from their parents' financial habits, often by example. Parents can turn to websites such as Mymoney.gov, AmericaSaves.org, ING Direct's Planet Orange, and SchwabMoneyWise.com for help.
50. Give a smart allowance. Alisa T. Weinstein, author of Earn It, Learn It: Teach Your Child the Value of Money, Work, and Time Well Spent, suggests teaching children to work for their money—in a fun way. She suggests connecting the allowance with tasks related to various careers, such as being a travel agent or chef. Travel-agent tasks include reporting on a destination in an appealing way, creating a brochure, and for older children, calculating exchange rates. "This way, the child is making the connection between effort and money, and the feeling that you worked hard for something. If you can capture that, then you're much more likely to have a child who grows up and can find emotional and financial fulfillment in their careers," says Weinstein.
2) In the Markets today:
Stocks finished little changed after rallying sharply in the previous session, as encouraging results from auto makers helped offset euro-zone liquidity concerns.
Wall Street flat as market brushes off Europe concerns-From Reuters
Major U.S. stock indexes were little changed in a low-volume session on Wednesday, but some investors were encouraged to see equities avoid a sell-off amid lingering euro zone's debt problems.
Indexes held on to the previous day's large gains even as the euro dropped sharply against the dollar.
Notably, U.S. banks held up well, even though bad news in Europe centered around the difficulties for some European lenders.
Tight credit markets are making it expensive for European banks to raise capital and for euro-zone countries to refinance debt. The latest sign of stress came from Italy's biggest bank, UniCredit, which fell nearly 10 percent after it offered to sell 7.5 billion euros ($9.8 billion) in shares at a steep discount to shore up its balance sheet.
A gauge of European bank shares dropped 1.6 percent, but in New York the KBW bank index added 0.34 percent.
"Some of what's been going on in the last weeks is the U.S. is starting to delink from Europe," said Jim Paulsen, chief investment officer at Wells Capital Management in Minneapolis.
"Not that we've totally isolated ourselves, but the fact you're seeing more days when the euro is off and the market here is up is evidence of some delinking," he said. "If the U.S. economy is growing again, it's much less vulnerable to external shocks."
Investors were encouraged by a sharp rise in new orders for U.S. factory goods in November, further evidence the economy is recovering.
The euro, which moved in lockstep with equities for most of the past quarter, slumped to its lowest level against the dollar in nearly a week.
The once-tight relationship between the S&P 500 and the euro continues to fray. The 50-day correlation coefficient between S&P e-mini futures and the single currency fell to 0.22, its lowest since mid-September. A perfect correlation score is 1; a score of 0 indicates no correlation.
The Dow Jones industrial average gained 21.04 points, or 0.17 percent, to 12,418.42. The S&P 500 Index edged up 0.24 point, or 0.02 percent, to 1,277.30. The Nasdaq Composite dipped 0.36 point, or 0.01 percent, to 2,648.36.
U.S. new vehicle sales released on Wednesday showed automakers ended the year with strong sales, but they forecast lower growth in 2012.
GM shares rose 0.5 percent to $21.15, while Ford added 1.5 percent to $11.30.
Netflix Inc, down more than 60 percent last year, led consumer stocks higher with a 11.4 percent rise to $80.45. The S&P consumer discretionary sector rose 0.7 percent.
Yahoo Inc shares fell 3.1 percent to $15.78 after it named PayPal president Scott Thompson as its chief executive, taking over on January 9 from interim CEO Tim Morse, who will resume his role as chief financial officer.
AT&T Inc agreed on Tuesday to pay TiVo Inc a minimum of $215 million and additional monthly licensing fees to settle a patent infringement dispute. AT&T shares gained 0.2 percent to $30.43, and TiVo jumped 10.1 percent to $9.82.
On the New York Stock Exchange 1,541 issues declined and 1,465 advanced, and on Nasdaq 1,521 declined and 963 advanced.
About 6.23 billion shares changed hands on the NYSE, Nasdaq and Amex, compared with last year's daily average of about 7.84 billion shares.
3) Top financial story of the day:
Retailers are expected to report healthy sales gains in December, as a last-minute flurry of shoppers scooped up marked-down merchandise.
Tallying the Christmas Rush: Sales Gain, Profit Pain?-From CNBC
So after months of speculating how retailers would fare during the holiday season, investors will get some hard-and-fast answers Thursday, when more than 20 retail chains report their monthly sales for December.
Retailers are expected to report healthy sales gains in December, as a last-minute flurry of shoppers scooped up marked-down merchandise.
On average, analysts are estimating a 3.4 percent gain in sales at stores open at least 12 months, year-over-year, according to the Thomson Reuters Same-Store Sales Index.
If this proves true, the gain would actually top the group's increase last December of 3.1 percent.
According to Thomson Reuters, discounters in the group should post the strongest sales gains on a percentage basis, offering yet another sign of consumers' thrifty attitudes.
Despite the optimistic attitudes regarding sales, there remains some concern about the price retailers paid to woo consumers. Many retailers slashed prices during the holiday season and extended their hours to lure in consumers.
The strategy appears to have worked. Earlier Wednesday, the International Council of Shopping Centers and Goldman Sachs showed the month ended on a high note, with sales for the week ended Dec. 31 up 5.3 percent, which was the fastest weekly gain since July 11, 2010.
However, Thursday's upcoming batch of monthly sales reports may offer insight into whether the discounts retailers offered plus the extended store hours squeezed their profits.
The late Christmas rush may make all the difference to retailers, according to some analysts.
In a research note, Stifel Nicolaus analyst Richard Jaffe said the high-volume sales periods (and the lulls) continue to grow "more pronounced" in retail. Still, Jaffe was encouraged that while promotions continued, the level for most retailers he follows did not accelerate.
Ahead of Thursday's reports many retail stocks were trading lower. Among them were discounter Target (NYSE: TGT - News), luxury retailer Saks (NYSE: SKS - News), and department store JCPenney (NYSE: JCP - News). Shares of Wal-Mart Stores , the nation's largest retailer, also fell
Wednesday, although the retailer doesn't report its same-store sales on a monthly basis.
But other retail stocks were posting gains, including Gap (NYSE: GPS - News), which has been struggling to turn around its business; TJX Cos. (NYSE: TJX - News), the parent of off-price retailers TJ Maxx and Marshall's; and Limited Brands (NYSE: LTD - News), the parent of Victoria's Secret.
4) Quote of the Day from Dave Ramsey.com:
Our plans miscarry because they have no aim. When a man does not know what harbor he is making for, no wind is the right wind. — Seneca
Tuesday, January 3, 2012
Financial Headline News for Tuesday 1/3
HAPPY NEW YEAR!!! BEST OF LUCK IN 2012
1) Phil's Financial Tip of the Day:
It is that time of year again-Goal Setting.
Here is how I break down my goals each year by category:
3)Professional
4)Financial
5)Entertainment
6)Physical
7)Social
For your financial goals, focus on:
1) Building an emergency fund of 6 months.
2) Attacking your debts by paying off from lowest to largest amounts one by one or paying off debts from highest to lowest finance % one by one.
3) Contributing 15% to retirement only after the emergency fund of 6 months is complete and all debts are paid off in full.
2) In the Markets today:
Wall Street stocks kicked off 2012 with a rally on Tuesday after data showed U.S. manufacturing activity and construction spending picked up. The Dow advanced roughly 180 points.
Happy New Year: Stock indexes end up about 1.5%-From USA Today
Stocks ended higher Tuesday, the first trading day of 2012, after positive economic reports from around the globe.
US manufacturing activity-as well as employment in the sector-rose to its highest level since June, joining a series of economic reports that indicates Friday's jobs number may be better than some expect.
The growth in the ISM Manufacturing index also matches a global trend of improving factory activity in December from the month before. The ISM index rose to 53.9 from 52.7 in November and 50.8 in October. A reading above 50 shows economic expansion.
The employment component rose to 55.1 from 51.8 in November, the highest since June.
"Manufacturing might be a kind of small part of the employment picture, but it's consistent with some of the other indicators which should show it (December employment) to be a good report," Feroli said.
Feroli said he is currently expecting December nonfarm payrolls of 185,000, above the consensus 150,000. The report is released Friday morning.
Pierpont Securities Chief Economist Stephen Stanley said while he does not see the employment component of the ISM to be that predictive of jobs, he does see the improvement in the index as a measure that could reflect a better hiring environment.
"There've been a lot of encouraging signs over the last month or two. Claims numbers are lower, certainly. The confidence board indicators are better. That's something people look at, and it just seems anecdotally that things are getting better," Stanley said. "I think there's every indication the jobs market is improving."
He said he forecast nonfarm payrolls at 135,000 at December but expects to revise up his preliminary number.
"I don't expect any explosion in hiring over the next couple of months, but I think we'll keep looking at incremental gains," he said.
4) Quote of the Day from Dave Ramsey.com:
Each generation goes further than the generation preceding it because it stands on the shoulders of that generation. You will have opportunities beyond anything we've ever known. — Ronald Reagan
1) Phil's Financial Tip of the Day:
It is that time of year again-Goal Setting.
Here is how I break down my goals each year by category:
1)As a father/mother/married/single person
2)Religious3)Professional
4)Financial
5)Entertainment
6)Physical
7)Social
For your financial goals, focus on:
1) Building an emergency fund of 6 months.
2) Attacking your debts by paying off from lowest to largest amounts one by one or paying off debts from highest to lowest finance % one by one.
3) Contributing 15% to retirement only after the emergency fund of 6 months is complete and all debts are paid off in full.
2) In the Markets today:
Wall Street stocks kicked off 2012 with a rally on Tuesday after data showed U.S. manufacturing activity and construction spending picked up. The Dow advanced roughly 180 points.
Happy New Year: Stock indexes end up about 1.5%-From USA Today
Stocks ended higher Tuesday, the first trading day of 2012, after positive economic reports from around the globe.
The Dow Jones industrial average jumped nearly 180 points, gaining 1.5%. The S&P 500 ended up 19 points, gaining 1.6% and the Nasdaq composite rose 44 points, a 1.7% gain.
Banks and materials and industrial companies posted the largest gains. Bank of America (BAC) rose 4.8% and Caterpillar (CAT) 4%, were big winners among the 30 stocks in the Dow.
The gains were broad. All but one of the 30 Dow stocks, Johnson & Johnson (JNJ), were higher, and nine out of the 10 industry groups in the Standard & Poor's 500 index rose. Utilities, traditionally conservative stocks to own, were the only sector to fall.
In the latest sign of strength in the U.S. economy, manufacturing expanded in December at the fastest pace in six months. Construction spending jumped in November as builders spent more on single-family homes, apartments and remodeling projects.
Germany, Europe's largest economy, reported that the number of people unemployed last year was the lowest in two decades. And a Chinese manufacturing index rose in December, reversing a November slide and raising hopes that China's economic slowdown is under control.
January is traditionally a fairly good predictor of the year to come for U.S. stocks. In the past 83 years, the full year has taken its direction from the first month 60 times, said Howard Silverblatt, senior index analyst at S&P.
The first day is less useful, however. If you were to bet on whether the market would finish the year up or down based on how it performed the first day, you would be right only about half the time.
Tuesday was on the track to be the fourth straight year of market gains on opening day. On Jan. 3, 2011, the S&P rose 14 points, but the market finished the year almost exactly where it began. The S&P 500 finished down a sliver — 0.04 of a point.
The economic reports overshadowed, at least for a day, concerns in the global markets about the European debt crisis, which will probably be the main catalyst for markets in the weeks ahead.
Surveys showing that the economies of China and India may be picking up momentum are helping boost the mood of investors.
Earlier Tuesday, the government of debt-crippled Greece's warned that it would have to ditch the euro currency if it cannot secure a second international bailout worth $169 billion.
Investors have been afraid that a Greek exit from the euro currency union would further disrupt the Greek economy and cause heavy losses for European banks that hold Greek government debt, perhaps triggering a global financial crisis.
It's a busy week for economic data, culminating in Friday's closely watched U.S. December employment report. That often sets the market tone for a week or two, and investors will be keen to see whether the recent improvement in the U.S. economic news is evident in the jobs data, which tends to lag other economic indicators.
The consensus in the markets is that the U.S. economy generated another 150,000 or so jobs during the month — solid, if unspectacular, job creation in the world's largest economy.
Overseas, markets were mostly higher. In Europe, Germany's DAX was up 0.6%, but the CAC-40 in France was 0.8% lower. Britain's FTSE 100 index of leading British shares, which was closed Monday, was trading 1% higher.
Asian stocks rose earlier, with Hong Kong's Hang Seng Index jumping 2.4% to close at 18,877 on its first trading session of 2012. South Korea's Kospi index rose 2.7% to 1,875 and Australia's S&P ASX 200 gained 1.1% at 4,101. Benchmarks in Japan and mainland China remained closed for the extended New Year's holiday.
3) Top financial story of the day:
U.S stocks kicked off the new year with strong gains, as better-than-expected economic data around the globe buoyed investor sentiment. The Dow was at late-July levels.
U.S stocks kicked off the new year with strong gains, as better-than-expected economic data around the globe buoyed investor sentiment. The Dow was at late-July levels.
US Factory Growth Shows Jobs Might Be Picking Up-From CNBC
US manufacturing activity-as well as employment in the sector-rose to its highest level since June, joining a series of economic reports that indicates Friday's jobs number may be better than some expect.
The growth in the ISM Manufacturing index also matches a global trend of improving factory activity in December from the month before. The ISM index rose to 53.9 from 52.7 in November and 50.8 in October. A reading above 50 shows economic expansion.
The employment component rose to 55.1 from 51.8 in November, the highest since June.
"Manufacturing might be a kind of small part of the employment picture, but it's consistent with some of the other indicators which should show it (December employment) to be a good report," Feroli said.
Feroli said he is currently expecting December nonfarm payrolls of 185,000, above the consensus 150,000. The report is released Friday morning.
Pierpont Securities Chief Economist Stephen Stanley said while he does not see the employment component of the ISM to be that predictive of jobs, he does see the improvement in the index as a measure that could reflect a better hiring environment.
"There've been a lot of encouraging signs over the last month or two. Claims numbers are lower, certainly. The confidence board indicators are better. That's something people look at, and it just seems anecdotally that things are getting better," Stanley said. "I think there's every indication the jobs market is improving."
He said he forecast nonfarm payrolls at 135,000 at December but expects to revise up his preliminary number.
"I don't expect any explosion in hiring over the next couple of months, but I think we'll keep looking at incremental gains," he said.
4) Quote of the Day from Dave Ramsey.com:
Each generation goes further than the generation preceding it because it stands on the shoulders of that generation. You will have opportunities beyond anything we've ever known. — Ronald Reagan
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