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Showing posts from 2010

Generation Y Savings Woes Echo Their Elders

by Joe Mont

With decades to go before they retire, one might see those age 18 to 30 as having plenty of time and opportunity to save and plan for their future.

But the drumbeat of how older generations are scrambling to secure adequate retirement savings is being sounded for young people as well by Aon Hewitt, a global human resource consulting firm.

The usual suspects of stagnant wages, job insecurity and a steady decline in pension plan and retiree medical benefits may jeopardize the age group — termed by Aon Hewitt as being Generation Y, although other demographers give different years for inclusion in that group — as much, if not more, than their elders, research by the firm says.

Eight in 10 Aon Hewitt-defined Generation Y workers "will not meet all of their financial needs in retirement unless they significantly improve their saving and investing behaviors," the report claims.

After factoring in inflation and postretirement medical costs, its researchers project Generation …

3 Investments That Could Rally in 2011

By Jonas Elmerraji

BALTIMORE (Stockpickr) -- 2010 is nearly behind us -- and what a year it's been. While the broad market's double-digit run-up has been nothing to scoff at, it's paled in comparison with the massive rallies that have taken place across specific industries and other asset classes.

Defense contractors are up nearly twice as much as the broad market this year; small-caps have rallied even more than that; and precious metal funds are up more than four times as much as the S&P in 2010.

But focused investing in those plays is easy when you have the benefit of hindsight. Instead, today we'll look at investments to focus on for 2011. With a new year just a few trading days away, a handful of industries stand out as attractive investments for 2011.

Here's a look at why you should be paying attention to these three investments in the coming year -- and how you can put these plays to work for your own portfolio.

1. Precious Metals

I mentioned earlier that prec…

Make Money in 2011: Your Job

by Anne C. Lee

If you've made it this far into the toughest job market in decades without being laid off, chances are you're out of the danger zone.

"While businesses may not be hiring a whole lot next year, they won't be firing a whole lot either," says economist Joel Naroff.

Most economists agree that the worst is behind us, and that new job creation will pick up modestly as the year wears on. But worries about the slowpoke economy and the possibility of a double dip will keep companies from adding enough positions to make a serious dent in joblessness.

The consensus among 46 forecasters recently surveyed by the National Association for Business Economics is that the unemployment rate will end 2011 around 9.2%, from 9.6% now. It'll take another six years for unemployment to get back to pre-recession levels, according to estimates by the Congressional Budget Office.

Still, if you're a valued employee, the outlook is much brighter, as employers will focus on r…

Your Tweets Could be Worth Millions

Starting in February, a group of very bold hedge fund managers are launching a multi-million dollar hedge fund whose strategy relies on one very unusual market indicator: your Twitter account.

London-based hedge fund Derwent Capital Markets said it had successfully marketed a new venture to a series of high-net worth clients that makes investment choices using information gathered from over 100 million daily tweets.

Simply put: the fund mines the Twitter-verse to gauge market sentiment, and that information-which the firm futuristically brands as "The 4th Dimension" is used to drive the portfolio's holdings.

The 'Twitter Fund', officially marketed to clients as the Derwent Absolute Return Fund, has already attracted at least £25 million in investments, according to the fund's manager Paul Hawtin-who is also the firm's founder. And it is currently in discussions to hire John Bollen, an Indiana University professor who has championed academic theories linking …

The new young investor: Shunning stocks

Hibah Yousuf

When 18-year-old Robert White decided to jumpstart his retirement plan, he invested his life savings of $25,000 into an aggressive mutual fund.Little did he know that just five years later, he would make a complete 180 and join the ranks of a new group of young investors who have become so risk averse by the wild market swings that they'd rather park their money in safety zones, like CDs or Treasurys.Today, only 22% of investors under the age of 35 say they're willing to take on a substantial level of risk, according to the Investment Company Institute. Compare that with 2001, when that same group outpaced every other age bracket."We're coming off a series of financial crises that hit this young generation at points in their lives where external events shape strong opinions," said Christopher Geczy, adjunct associate professor of finance at University of Pennsylvania's Wharton School.When White's fund began to slip with the broade…

3 Investment Traps for 2011

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It's the end of the year and Wall Street is busy selling their New Year forecasts.According to 10 strategists and investment managers polled by Barron's, there's no cloud in the sky. The future's looking bright.If you've followed Wall Street forecasts for a few years, you must have discerned a pattern: Forecasts are always rosy. If Wall Street analysts were meteorologists, their outlook would always be 'sunny' unless it is actually raining.Therein lies the problem; Wall Street never sees hard rain coming and only offers an umbrella after investors have gotten trenched. The purpose of this article is to provide an out of the box forecast with analysis you won't hear on the Street.Insiders vs. AnalystsAnalysts have their optimistic disposition implanted by the companies they cover. Corporate managers have every incentive to stay positive for as long as they can.Ironically, as CEOs project record high earnings, insider selling has picked up asI…

Who Will Struggle in 2011

Rick Newman

For many Americans, the recession is finally over.

Economic growth in 2011 is likely to exceed 3 percent, and perhaps even hit 4 percent. That would be the best performance in more than a decade. Workers who held onto their jobs during the Great Recession can finally exhale, with growing confidence that their job security is improving. Companies are grudgingly starting to hire back a few of the unemployed. And the latest stimulus and tax-cut plan out of Washington will put cash into practically every taxpayer's pocket, just to make sure the economy keeps marching forward.

Yet the economic landscape in the aftermath of the Great Recession is littered with wreckage. Battered industries like construction and real estate won't return to normal for years. A few states, including California and Illinois, are nearly insolvent, with tax hikes and service cuts the only way out. Homeowners have lost trillions of dollars' worth of home equity, thanks to the housing bust. And…

Who Will Prosper in 2011

Rick Newman

The worry lines are finally starting to fade.

After 18 months of a stutter-step recovery, the economy seems to be gathering steam. Most companies that survived the recession are lean and profitable, and there's a good chance they'll begin hiring again in 2011. Consumers who have jobs feel better about their prospects, which means they'll be more comfortable spending money. The latest stimulus and tax-cut plan out of Washington is surprisingly meaty, with the impact likely to be felt in many American households. "Despite threats, 2011 is shaping up to be a better year for the U.S. economy," writes economist Mark Zandi of Moody's Analytics, who predicts healthy growth in 2011 of nearly 4 percent. "After three years of recession and weak recovery, the change will feel significant."

The benefits will be spread unevenly, however, and high unemployment will be a huge, nagging problem. Many Americans may simply live in the wrong region or work in …

6 Excuses for Not Saving for Retirement

by Sheyna Steiner

Do You Need an Excuse?

Like the proverbial grasshopper, some people neglect to save for retirement and have plenty of excuses to justify their lack of foresight.

Every year, the Employee Benefit Research Institute conducts its retirement confidence survey to gauge how prepared Americans are for retirement. The 2010 survey, released in March, found that 54 percent of workers have less than $25,000 saved, excluding the value of their home and any defined benefit plans.

The justifications are endless and investment advisers have heard them all. While some excuses are grounded in reality, others defy logic.

I'm Paying for My Kid's College Education

Higher education costs money, as does retirement. Though it's a noble goal to fund Junior's college education, it shouldn't come at the expense of saving for retirement.

"Everyone wants to retire; not every kid goes to college," says Peter Donohoe, Certified Financial Planner at PRW Associates in Quincy,…

Merry Christmas to all my readers!! :)

A Sneak Preview of the Economy in 2011

by David Sterman

The recent agreement in Washington to resolve the tax impasse has led many economists to re-check their assumptions about the economy in 2011. Their conclusion: the outlook for 2011 just got a little better. Let's look at the specific economic indicators, and where most think they will be by the end of 2011.

I recently noted that there is a major distinction between 2.5% and 3.5% GDP growth in our economy. Just a few weeks ago, an economics think tank predicted growth of just 2.6% in 2011, which would be insufficient to help get various parts of the economy moving. Now, a different survey of economists conducted by The Wall Street Journal has economists singing a different tune. They now think the economy will grow 3.0% next year. The reason for their optimism: the new tax agreement that should help brighten the fortunes of the middle class, as income tax rates will stay lower, unemployment benefits will be extended, and payroll taxes will be temporarily reduced.

Yo…

10 Reasons to be Cautious for the 2011 Market Outlook

By David Rosenberg

There are forecasts everywhere of better times ahead in terms of employment, retail, inflation, GDP. David Rosenberg is having none of it. He sees the market as heavily propped up by the Fed. This is his look forward for 2011.

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1. In Barron’s look-ahead piece, not one strategist sees the prospect for a market decline. This is called group-think. Moreover, the percentage of brokerage house analysts and economists to raise their 2011 GDP forecasts has risen substantially. Out of 49 economists surveyed, 35 say the U.S. economy will outperform the already upwardly revised GDP forecasts, only 14 say we will underperform. This is capitulation of historical proportions.
The last time S&P yields were around this level was in the summer of 2000, and we know what happened shortly after that.

2. The weekly fund flow data from the ICI showed not only massive outflows, but in aggregate, retail investors withdrew a RECORD net $8.6 billion from bond funds during the week ended D…

New Year's resolution: I quit!

By Jessica Dickler

NEW YORK (CNNMoney.com) -- Employers watch out: Your workers can't wait to quit.

According to a recent survey by job-placement firm Manpower, 84% of employees plan to look for a new position in 2011. That's up from just 60% last year.

Most employees have sat tight through the recession, not even considering other jobs because so few firms were hiring. For the past few years, the Labor Department's quits rate, which serves as a barometer of workers' ability to change jobs, has hovered near an all-time low.

But after years of increased work and frozen compensation, "a lot of people will be looking because they're disappointed with their current jobs," said Paul Bernard, a veteran executive coach and career management advisor who runs his own firm.

Douglas Matthews, president and chief operating officer for Right Management, a division of Manpower, called the results "a wake-up call to management. ... This finding is more about employee d…

The rich are much richer than you and me

By Chris Isidore

NEW YORK (CNNMoney.com) -- The gap between the rich and the middle class is larger than it has ever been due to the bursting of the housing bubble.

The richest 1% of U.S. households had a net worth 225 times greater than that of the average American household in 2009, according to analysis conducted by the Economic Policy Institute, a liberal think tank. That's up from the previous record of 190 times greater, which was set in 2004.

The widening gap came even as wealthy households' average net worth tumbled 27% -- to about $14 million -- between 2007 to 2009. That's the first time that they suffered a decline since the three-year period of 1992 to 1995.

Meanwhile, the average family's net worth plunged 41% -- to just $62,200 -- from 2007 to 2009, according to EPI's calculations.

"The typical person lost more because a bigger percentage of their wealth in 2007 had been the value of their home," said Heidi Shierholz, an economist with EPI.
5 bill…

Now That Everyone Likes Stocks Again, Is It Time to Sell?

With investor sentiment bubbling at levels comparable to just before the market's historic highs in 2007, now may be the time to pull back some before the froth gets out of hand.

Strategists are almost universal in expectations for the market to climb from 10 percent to 20 percent in 2011, and investor polls show bullishness around 60 percent. Those are numbers reminiscent of October 2007, just before the worst of the financial crisis hit and the market lost more than half its value.

At the same time, stocks have been climbing steadily higher during what is a normally great month, rising 6 percent even on low volume. Finally, more than 3,400 new highs have been hit this month on the New York Stock Exchange.

It's at just such times of massive exuberance that the market is poised for a letdown.

"One of the things that increases the risk is indeed the rise in optimism," says James Paulsen, chief investment strategist at Wells Capital Management in Minneapolis. "We'…

Learn Career Lessons From 2010 to Thrive in 2011

Curt Rosengren

By the end of this month, you will have invested an entire year of your life into 2010. You can let that year slide silently into 2011, or you can do some additional work to make the most of your investment.

Your career (and life in general) can be an excellent research and development experiment, packed with insights and knowledge to build on in the future. But to unlock those insights, you have to pay attention.

Here are three questions that will help you mine the past year for all its value, and a fourth to help you create a positive foundation as you move into 2011:

1. What energized me? Why?

Look back at your work over the last year. What energized you? When did you feel in the groove? When were you most engaged? What were you doing? Then look at those answers and ask, Why? Why did that energize you? What was it about that experience that helped you find your groove? Why was it so engaging? Asking why helps you dig below the surface and identify the real source of the e…

What Car Mechanics Don't Want You to Know

by Jennifer Waters

You don't need to change your oil every 3,000 miles.

Here's a secret that mechanics don't want you to know: You really don't need to have your oil changed every 3,000 miles.

It's a waste of a precious resource -- not to mention money -- to take your car in every 3,000 miles or three months, experts say. On average, most cars don't need an oil change for 7,500 miles.

"The oil change itself is a loss leader," said Austin Davis, whose family has been in the car-maintenance business in Houston since 1937. He's the author of "What Your Car Mechanic Doesn't Want You to Know" and has a website called MyHonestMechanic.com.

"Most repair shops will lose money or at best break even on a $25 to $28 oil change," he said. "The whole idea is to get you to also buy an air filter, rotate your tires or buy something else while you're there."

[Click here to check auto rates in your area.]

Complaints about auto repair…

5 Financial Resolutions for the New Year

Doug Lockwood

It's never too early to start with New Year's resolutions, particularly as you enter the holiday season and begin contemplating how to best strengthen your family's financial future.

Here are five financial resolutions that will put you ahead of the curve over the long run.

1. Lay a balanced investment groundwork. Does your current asset allocation--the mix of securities in your investment portfolio--still match your risk tolerance and time horizon? Complete a risk tolerance questionnaire each year to make sure your asset allocation is aligned with the risk you are willing to assume. You can find many samples of these online or through your employer-sponsored retirement plan.

Why go through this exercise? Quite simply, stock market performance over the past few years may have shifted the value of your stock holdings above or below the level you had originally intended. This is a particularly worthwhile consideration given the extreme market volatility of the past…

Even Buffett Has Investment Lessons to Learn

ByJoe Mont

BOSTON (TheStreet) -- Even the Oracle of Omaha has those investments he might do over if given the chance.

In a recent annual letter to Berkshire Hathaway shareholders, an eagerly awaited piece of investing insight, Buffett cops to several mistakes. Among them: authorizing the purchase of a large amount of ConocoPhillips stock when oil and gas prices were near their peak. A dramatic fall in energy prices soon followed.

"The terrible timing of my purchase has cost Berkshire several billion dollars," Buffett wrote, segueing into regret over a $244 million parlay in two Irish banks "that appeared cheap" but soon incurred an 89% loss on the initial investment.

"The tennis crowd would call my mistakes 'unforced errors,'" Buffett said.

When a Buffett, Bill Gross or Larry Fink publicly discusses bad decisions, it makes headlines. But there is hardly an investor, pro or amateur, who doesn't have some woeful tale of a sure thing that wasn't …