Don't Give Up on Small Stocks

These days, it seems that nearly everyone is recommending large- company stocks. The big boys, according to many analysts, have attractive valuations, and the recovering economy should improve their prospects. But some pros are loath to dump the group of smaller stocks that have trounced the broader market for years.


Indeed, while the Standard & Poor's 500 index was up 13 percent in 2010, small and midsize stocks gained nearly twice that. Over the past two decades, small- and midcap stocks have produced an average annual return of 14 percent, while the S&P 500 has returned an average of 11 percent annually, according to FactSet Research Systems. And some portfolio managers say there's still plenty of opportunity in the small and midsize outfits. Smaller stocks tend to outperform their bigger cousins at the beginning of periods of economic expansion. It's easier for niche companies to do well right now, experts say, because they're not as dependent on the overall economy to grow, just small segments of it. "We're still in the early stages of the economic rebound," says Craig Hodges, portfolio manager of the $64 million Hodges Small Cap fund. Plus, some smaller companies remain attractive takeover targets for big firms with lots of cash but few growth prospects.

Of course, there's more risk with small and midsize firms. Their stock values tend to move considerably faster—both on the way up and the way down—than large firms. Most don't have as much cash as big firms, so a downturn could hurt them harder and more quickly, analysts say. The small stocks aren't cheap, either. Thanks to their big rally, they trade at an 11 percent premium compared with large firms. Historically, they trade at an average 2 percent discount, according to market research from The Leuthold Group. The stellar performance of small-caps and midcaps for so long has led many strategists to wonder if their heyday is over; Goldman Sachs, for one, sees the S&P 500 gaining 23 percent this year. "Large-caps are the most attractive cap sector right now," says Will Muggia, portfolio manager of the $840 million Touchstone Mid Cap Growth fund.

But Hodges says smaller companies that are well managed and are increasing earnings at a faster clip than sales remain attractive. Men's retailer Jos. A. Bank ( JOSB: 46.11, -1.18, -2.49% ) , for example, has been able to open stores and unveil new clothing lines even as others have cut back. Analysts also like Luby's ( LUB: 5.35, -0.05, -0.92% ) , a cafeteria chain that bought a larger restaurant outfit, Fuddruckers, out of bankruptcy. The business isn't growing much, but Hodges says Luby's management has a track record of turning businesses around. In the financial sector, credit card company Discover Financial Services ( DFS: 21.75, -0.07, -0.32% ) intrigues some pros. The firm, considerably smaller than its rivals, recently bought The Student Loan Corp. and could become an acquisition target for a large bank, says Don Wordell, manager of the $1.6 billion RidgeWorth Mid-Cap Value Equity fund.

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Where Checking Is Still Free

Following the path of the pneumatic tube and the passbook savings account, the cheap checking account is on its way to banking history. In its place, customers are finding the more-expensive checking account, with charges and fees at every turn. But even as costs rise – and checks become increasingly obsolete – there are still some cheap ways to bank by check.

Free checking accounts were a big sell over the last decade, as WaMu -- remember them? -- pushed other banks to drop their monthly fees and minimum balance requirements. But WaMu is gone, and less than half of all checking accounts are now free, according to MoneyRates.com. In July, Wells Fargo added fees to its formerly free checking account; this month, Chase also doubled some of its monthly fees. Now the total bill for a year's worth of checking could run up to $144. TD Bank, which earned customer loyalty for its no-ATM fee policy, has reversed itself. Starting in March, many customers will start paying $2 to withdraw cash from non-TD ATMs, "For many banks, there's no compelling reason why they should give free checking accounts anymore," says Brian Riley, senior research director for bank cards at TowerGroup, a financial research company.

A Chase spokesman says customers get value from the accounts and points out there are ways to avoid its fees, including making at least one $500 direct deposit, maintaining a $1,500 checking account balance, or incurring other fees. Overall, banks say the fees are the natural consequences of new government regulations that have squeezed revenues. In particular, they're talking about limits on overdraft fees, which went into effect in August, and the Durbin amendment to the financial reform bill, which limits how much banks can earn when shoppers use a debit card. Spokespeople for Chase, TD Bank and Wells Fargo, which replaced its free checking with a $5 monthly fee, say that regulatory changes are partly why they're increasing fees.

That means banks will try to put customers on the hook for the difference, says Riley. But there are still plenty of ways to get free checking. Credit unions and small community banks still typically offer the perk, and some banks offer free checking for specific age groups, like students (and their 50-plus parents). If you're interested in a bigger bank, or between the ages of 22 and 50, here are four cheaper alternatives to traditional checking accounts.

Online banks
Pro: Still free
Con: Limited access

Experts don't think online banks will be able to offer free checking forever, but for now, many still do. They also don't require minimum balances or charge monthly maintenance or ATM fees, and they throw in additional incentives that aren't typically offered at brick-and-mortar banks. Ally Bank, for example, features an annual percentage yield of up to 1.05%, which is higher than the average rate of 0.71% on interest-bearing checking accounts, according to Bankrate.com; ING Direct offers a $50 bonus to customers who open a checking account. But for people used to a branch on every corner, online-only accounts can be frustrating, because you typically have to deposit checks via the mail, or link to a brick-and-mortar account – which may defeat the purpose.

Brokerage firms
Pro: All-in-one service.
Con: Chipping away at investments.

Recently several brokerage firms have started to offer deposit accounts – as long as customers open an investment account as well. Charles Schwab and Fidelity are the most well-known: Both offer interest-bearing checking accounts, with no minimum balances and no ATM fees (they'll even reimburse any fees charged by the ATM itself). They also allow customers to use their brokerage offices for problems with their accounts and to deposit checks. The companies, of course, want to turn checking customers into investing clients, which is why they require customers to open a brokerage account. At Fidelity, the minimum investment is $2,500. At Schwab, there's no minimum. But there's the rub: If customers overdraw their checking account, the brokerage may take the amount of the overdraft from cash or money market mutual funds in the brokerage account. If the brokerage account is fully invested in stocks and bonds, the transaction won't go through.

Savings and money market accounts
Pro: Fewer fees, higher interest.
Con: Few transactions permitted.

Besides paper checks and a debit card, the biggest practical difference between a savings account or a money market account and a checking account is the amount of transactions you can make each month. On a savings account, Federal Reserve rules permit only six transfers or withdrawals per month, while checking accounts are far more flexible. In exchange for limited transactions, customers get higher interest rates: average money market account rates are up to 0.89%, according to Bankrate.com, but can run higher like up to 1.3% at American Express and 1.24% at Capital One. But break the six-transaction rule, and the bank can charge you, or change your account to a checking account. Even so, a savings account could work for someone who is comfortable with a credit card and pays off the balance each month (as opposed to a debit card), pays only a couple monthly bills, and uses little cash, says Richard Barrington, a banking analyst at MoneyRates.com. And fees, if they exist, are limited mostly to those who draw down on the account.

Prepaid cards
Pro: Lower fees than a checking account …
Cons: … except when they're higher.

When paired with a savings account, a debit card can do almost anything a checking account can. Consumers can use it to store cash, pay bills online, and swipe for purchases. Of course, the savings are variable. On the lower end, the Capital One MasterCard doesn't charge a monthly fee for customers who load at least $500 each month (otherwise it's $4.95) and the Green Dot Gold Visa, which charges $5.95 a month. (These cards also don't charge the activation or transaction fees for purchases that are typical of most prepaid cards.) But more prepaid cards with lower fees are likely on the way, says Odysseas Papadimitriou, CEO of Cardhub.com, a credit and prepaid card comparison web site – they weren't affected by the recent government legislation, so they're more profitable for the banks.

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A Portfolio to Keep Income Flowing

While pension funds are increasingly seen as relics from a bygone age, they can still teach investors a thing or two about managing money during retirement.


Pension funds and retirees have similar goals. A retiree is trying to maintain a certain standard of living, including the basics of having enough money to pay the bills for the rest of his or her life.

A pension fund, meanwhile, has to ensure it can make the payouts it owes to participants for the rest of their lives.

In both cases, the primary goal isn't to make as much money as possible or "beat the market." Instead, it's to create a portfolio of investments that will allow you to meet specific obligations -- no matter what happens in the markets.

This may seem like a distinction without a difference. But it requires a fundamentally different mindset and approach than investing to maximize returns.

It even has a name: liability-driven investing.

"You're not investing to maximize returns...you're maximizing the chance of being able to meet future income needs," says Christopher Jones, chief investment officer at Financial Engines, which provides asset-allocation services to 401(k) plans.

Compared with a growth-focused investment strategy, a liability-driven portfolio is more likely to have a heavier weighting toward safe bond investments that provide a predictable level of income and much less in stocks. And it's one where despite the high level of bond holdings, rising interest rates can actually be good news -- even though that hurts the day-to-day value of your bond portfolio.

The most straightforward form of liability-driven investing is a "bond ladder," a portfolio of U.S. Treasury bonds, which mature gradually over time and provide a guaranteed source of future cash.

Unfortunately, most individual investors don't have account balances big enough to make a bond ladder work. But it's possible to approximate the strategy with mutual funds, although it requires a more hands-on approach and discipline.

The challenge with mutual funds is that, unlike owning individual bonds, most funds don't mature and return a predictable amount of money at a specific date in the future. To approximate this key part of a bond ladder, an investor can buy a series of short, intermediate and long-term bond funds. However, it requires being diligent about gradually rolling the money down the maturity spectrum to shorter-term bond funds over the years.

Financial Engines, for example, will create an income-generating portfolio for a 65-year-old that is 80% bond funds and 20% stock funds. This is a much lower stock allocation than many target-date mutual funds, which put more than half of investors' money into stocks at that age.

"You could do a fund that is 60% stocks and 40% bonds and simply consume 4% or 5% of what there is in the portfolio every year," says Mr. Jones. "If the market does well, your income goes up. But if the market goes down, your income goes down."

He adds that "when you're in retirement, you want to minimize the chances that your income is going to go down. You want to use bonds to structure the income floor you can count on."

Bonds, of course, do have their risks, such as the possibility that an issuer will default on its payments.

In addition, bonds will lose value when interest rates rise. For someone holding individual bonds, this isn't an issue because that won't have an impact on the amount of income the bonds pay out.

In fact, this is one area that requires a different mindset: Higher rates can be a positive.

"If interest rates go up, the amount of money you need to meet your liabilities goes down," says Aaron Meder, head of U.S. pension solutions at Legal & General ( LGEN.LN ) Investment Management America, which specializes in liability-driven investing.

Here's why: If you need your portfolio to pay out $10,000 a year, at 4% interest rates you need $250,000 in bonds. But with 6% rates, you need much less, only $180,000 in bonds.

Also, the stock portfolio is there to help offset any losses that have to be taken in a bond-fund portfolio. The stock holdings, which hopefully grow in value over time, should be slowly shifted into bonds and potentially reinvested at higher yields.

"A situation where rates go up might be a great time to move money from a growth portfolio to [bonds] to lock in a reduction in retirement income-funding needs," says Mr. Meder.

This highlights a key point. "The thing that's different is you're no longer focused on the value of your portfolio, but what is the ability of those assets to meet your future liability," says Financial Engines' Mr. Jones.

One final piece of the puzzle: Investors still need to hedge against outliving their money. This is where an annuity, which guarantees income for life but locks up your money, can come in.

Financial Engines recommends taking about 15% of the portfolio and buying an annuity. But the firm suggests waiting until you're in your early to mid-70s to do so.

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Why Stocks Are Tanking (It's Not Just Libya)

IT'S NOT JUST ABOUT Libya. There's another reason the stock market just took a hit. Everyone had become way too bullish and way too complacent.


Pride, as they say, goeth before a fall. When everyone's bullish, who is left to come in?

We're slap-bang in the middle of another mania.

How crazy have people become? Last week a portfolio manager I know told me about a conversation he'd just had with one of his clients. This manager runs a conservative practice. His clients are solid, sensible types—some old money, and some new money that thinks a bit like old money. One of his clients, a partner in a small private firm, had called him up and said, casually, that he and his partners were discussing this year's bonus pool. "We're thinking about putting it all in Apple ( AAPL: 353.13*, +4.97, +1.42% ) stock for the year. What do you think?" he asked.

The portfolio manager thought the guy was kidding. "No, we're serious," the client replied.

Huh?

"Why not?" he went on. "I mean, it's not like Apple's going to go down. It's a sure thing."

Yikes. You see this type of stuff when animal spirits are soaring.

No wonder IPOs are back on the menu. The time to take your company public is when the investors are rushing around with their checkbooks open.

A few days ago, while everyone was watching events unfold across the Arab world, an intriguing document came across my desk. It was the monthly Bank of America/Merrill Lynch survey of the world's top investment managers.

Bank of America ( BAC: 14.23*, +0.03, +0.21% ) spoke to 270 institutional investment managers—with a thumping $773 billion in assets—around the world and asked them for their views on the markets.

In a nutshell? They were about as euphoric as they have been since the late 1990s. "Institutions have record equity and commodity overweights, very low cash levels and the strongest risk appetite since Jan '06," reports Bank of America. Cash had fallen to 3.5% of assets—a dangerously low level. BofA research says that in the past, when it has fallen that low a stock market "correction" has usually followed in a matter of weeks.

Our old friends the hedge funds are back to where they were before the crash. According to the BofA report, hedge funds are betting as heavily on booming share prices as they were in July 2007, and the last time they were playing with this much borrowed money was in March 2008. Ah, the happy memories ...


There are no certainties in the markets, but the Bank of America/Merrill Lynch survey is among the better indicators. On the occasions when it has shown sentiment at extreme levels, it has often proven an excellent "magnetic south," pointing you in exactly the wrong direction. If you had sold when everyone was crazy bullish, and bought when everyone was crazy bearish, you would not have done badly over the years. After all, the big institutions are the ones that bet the big money. If they are already loaded up to the gunwales with equities, who's going to be the next buyer?

It isn't just the institutions, either. The individual American investor, who has been selling stocks for most of the past couple of years, has suddenly turned tail and started buying again. Portfolio managers will tell you their clients have been back on the phone since the start of the year, eager to get in on the action. The Investment Company Institute, a trade organization for mutual funds, reports big inflows of new money into stock-market funds since early January. Indeed, inflows into U.S. stock funds have been running at levels not seen—but for a single brief spike in 2009—since well before the crash.

Sentiment is one thing. Valuation is another. And Wall Street is frankly expensive by most measures. The dividend yield on the overall market, according to FactSet, is a measly 1.5%. The last time it was this low for any length of time was during the great bubble years of 1997 to 2001. According to data tracked by Yale University economics professor Robert Shiller, the market overall is priced at about 24 times cyclically-adjusted corporate earnings. That is very high; the average is about 16. Last week I screened the stock market for good dividend stocks: blue-chip companies whose shares are selling cheaply and which offer decent yields. The ranks are pretty thin these days. Everything has boomed.

White-shoe fund company GMO has just published its latest investment forecasts. From today's levels, it says, investors are looking at pretty slim long-term pickings. Indeed, it thinks typical investors in U.S. equities will be lucky to make money, after inflation, over the next seven or so years.

None of these indicators are dispositive. Nothing in the investment world is ever more than about 80% certain. Last week I spoke to a brilliant hedge-fund manager I know, and he was a raging bull. But then he's trading on short-term moves, and he's been buying things like distressed European financial stocks, where the bold (or foolish) may yet find bargains. It's a dangerous game.

For anyone looking to make long-term investments, the situation right now offers plenty of grounds for caution. And it's not just because of Libya.

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6 Ways Conventional Wisdom Wastes Money

Updated guidelines, better ways to save.

Most of us learned the basic tenets of budgeting, housekeeping and auto maintenance from our parents. But times have changed, and some of the things you believed to be true are not the case anymore.

Following are several examples of conventional wisdom that may cause you to needlessly waste money. Dig in and learn how to effortlessly save money by thinking outside the box.

Change Your Oil Every 3,000 Miles

The little sticker placed on the car windshield reminds you to change a car's oil every 3,000 miles -- regardless of make, model or scenario.

But many experts now say the 3,000-mile oil change is dead. Why? New car engines and oil quality have advanced to the point where cars can go 5,000 to 10,000 miles without a change.

"Generally speaking, vehicles don't need to be changed every 3,000 miles anymore," says Tara Baukus Mello, author of Bankrate.com's Driving for Dollars column. "It's somewhere between 5,000 to 10,000, unless they have an engine oil sensor, and then it could be anywhere."

However, don't automatically assume you can push oil changes beyond 3,000 miles.

"It's important to consult your owner's manual for the frequency, the number of miles, the length of time between changes and the type of oil -- and to follow whatever those instructions are," Mello says.

Use Sheets With Sky-High Thread Counts

New sheets usually have the thread count listed on the packaging. There's a misguided notion that more is better, says Barbara Flanagan, author of "Flanagan's Smart Home: 98 Essentials for Starting Out, Starting Over, Scaling back."




Sheets with a lower thread count are better for several reasons, Flanagan says. They can be washed and dried faster, which saves money on laundering, as they take up less space and dry quicker.

In addition to the money saved, lighter sheets are better for your skin, she says.

"You want your body to breathe through the sheets," Flanagan says, "and you want to get your laundry done in as few loads as possible, so the choice of sheets is really important."

Flanagan also recommends using waffle-weave towels over the traditional large fluffy towels that Americans tend to buy. Waffle weave towels are also cheaper to wash -- and can even be air-dried, she says.

"So that really saves a lot of money in the dryer," Flanagan says. "Your dryer is one of the most expensive appliances (to run) in the house."

Keep Ceiling Fans On in an Empty Room

The ceiling fan is a great alternative to -- or accompaniment to -- air conditioning, right?

Not unless you are in the room, says Gregory Karp, personal finance columnist and author of "The 1-2-3 Money Plan."

"(People) leave ceiling fans on in rooms where there are no people -- but ceiling fans don't cool rooms at all, they only cool people," Karp says. "They create a wind chill factor that makes human skin feel cooler. It has nothing to do with cooling your sofa in an empty room."

And in the winter, running a ceiling fan in the opposite direction doesn't offer many benefits, Karp says. In houses with high ceilings, the fans can push the heat down -- but otherwise, they will often create a wind chill and waste electricity.

And the cost can be significant, setting you back $35 per year on your utility bill to leave a large ceiling fan set on high through the night each night.

Bottled Water Is Healthier Than Tap

We've all heard stories about sketchy tap water. But a lot of bottled water is not much better. In fact, there is less quality oversight for bottled water than there is for tap water, Karp says.

"This is a beverage that falls from the sky for free. It's given away at public water fountains," Karp says. "Yet somehow, this industry has convinced us to go to the store (and) pay real money for this stuff."

Tap water is regulated by the Environmental Protection Agency, Karp says, and checked for quality more frequently than bottled water, which is regulated by the Food and Drug Administration.

And, according to the EPA's website, "Some bottled water is treated more than tap water, while some is treated less or not treated at all."

Lavish Vacations Beat Simpler Ones

People love to take vacations. But airfare, hotels, restaurant meals and activities can suck up money like a vacuum cleaner set on high.



Vacations don't have to be lavish. Consider skipping a trip to Paris and instead camping somewhere within your state's borders or visiting a friend in a nearby city. Travel time will be shortened, and your wallet will thank you.

How about skipping the trip altogether, and really saving cash? Karp and Flanagan offer good reasons for making room for a bare-bones vacation in your budget.

"Academic studies show time and again, and they all confirm each other, that people are much happier buying experiences than buying more stuff," Karp says. "And the reason is that experiences actually improve with time, like a fine wine."

Flanagan agrees. She says her family decided to travel for Christmas and Hanukkah instead of exchanging gifts.

"And so we don't have any sweaters or socks to show for the holidays," she says, "But we have all these great pictures of all these people in all these great places -- and everybody looking pretty happy."

Cable and Satellite Trump Rabbit Ears

Most people could save boatloads of money if they dumped their cable or satellite plan -- possibly enough to fund a modest vacation.

If you're keeping cable or satellite because you think it has a better picture than rabbit ears, think again, Karp says.

"I think a lot of people think that if you get television over your antenna that somehow that's inferior to cable or satellite," he says. "But the picture's actually better since we switched over to digital."

Now that nearly all stations broadcast programming in a digital format, the picture captured by an antenna is less-compressed than it is through cable or a satellite system, Karp says.

"The best picture you can possibly get is with a regular rabbit ears antenna," he says.

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Putting Consumer Debt Into a Bigger Perpsective

One thing you could be sure of in pre-Great Recession America was that U.S. consumer debt would rise pretty consistently. The chart below from a Federal Reserve Bank of New York report titled Quarterly Report on Household Debt and Credit depicts the trend: In the 10-year period from 1999 to 2008, debt dipped significantly only once, in mid-2001.

Considering that 2001 was a recessionary year marked by 9/11, that's all the more remarkable.

Then came the recent downturn. The expansion of debt peaked in mid-2008 and then began a steady decline as the recession took hold. Though the slump officially ended in mid-2009, consumer debt continued falling through 2010.

As reported on DailyFinance earlier this month, consumer credit use staged a modest recovery in December 2010: Revolving debt (credit cards) increased from $807.2 billion in November to $826.6 billion in December, and nonrevolving debt (auto loans, etc.) rose from $1.608 trillion in November to $1.611 trillion in December.

This expansion aligns with the 0.6% improvement in retail sales logged in December and the 6.7% rise in consumer sales for 2010. But does this increase mark a new trend of rising consumer debt, or was it more akin to bouncing along the bottom?

To get some longer-term perspective on this question, let's look at some charts from the St. Louis Federal Reserve and review both the Federal Reserve's Flow of Funds report and the New York Fed's recent report on consumer credit.

An Economywide Expansion of Debt

As we can see in the chart below, consumer debt rose steadily during the inflationary 1970s, flattened briefly in the deep recession of 1982-83, and then began a steep 25-year rise. Consumer debt rose from $2 trillion in 1984 to $14 trillion in 2008 -- an extraordinary expansion, given that adjusted for inflation, that $2 trillion from 1984 would equal $4.23 trillion in today's dollars.

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Will Silver Outshine Gold Again in 2011?

Everybody knows gold had a great year in 2010, rising 27% and beating most other investments. But silver actually did much better, climbing a breathtaking 83%. Can the "poor man's gold" continue to outperform its more expensive big brother?

Many analysts think so. Adrian Day, an asset manager and author of a recent book on commodities, Investing in Resources, says that for 25 years silver stockpiles were so huge that its price didn't move. But in recent months, the stockpiles have been exhausted.

"Supply-demand has been pretty tight" Day says. "I think silver could continue to go up." But he also cautions that the recent large jump, particularly since last August, means that "clearly the downside has increased."

Favored Ways of Investing

Peter Schiff, CEO of Euro Pacific Precious Metals in Westport, Conn., says he looks at the ratio between the prices of gold and silver. With gold at $1,400 an ounce and silver at $30.90, that ratio is 45:1, which is very high by historical standards.

"I think that still favors silver," Schiff says. "If the gold bull market continues, which I believe it will, people will continue to make more money in silver than in gold. If we have a big decline, then silver will go down more."

Day favors investing in silver in exchange-traded funds (ETFs), such as the iShares Silver Trust (SLV), while Schiff favors putting money in bullion. But a note of caution: Owners of physical silver (and gold) such as coins or via ETFs have to pay a collectibles tax of 28% on long-term gains, as opposed to the 15% tax on other long-term capital gains.

"As gold gets more and more expensive, there are a lot of people who cannot afford to buy an ounce of gold anymore," says Schiff. "So they take what's left of their paycheck and buy silver."

Not "Particularly Cheap"

Data from the U.S. Mint confirms this trend. It says sales of its American Eagle gold coins fell 14% last year, while silver coin sales were up almost 20%. Of course, that could be simply because investors had switched to investing in ETFs rather than owning physical coins, but the greater demand for silver is plain.

Another possible investment alternative is to buy stocks known as silver-stream shares. Both Day and Schiff say they own (SLW), and Schiff also owns Endeavour Silver (EXK). Silver Wheaton has outperformed the underlying silver price, climbing 162% in the last year. "None of the silver stocks is particularly cheap," says Day.


Silver isn't actually mined directly anymore. Rather, 75% to 80% of its production is the byproduct of other mining activities such as copper, lead or zinc. Silver-stream companies purchase a portion of the silver output of these byproduct mining operations, usually by offering an upfront payment in return for a steady supply at a fixed price.

One of silver's attractions is that it has many industrial uses. As supplies get consumed, upward pressure is put on silver prices. Gold, on the other hand, has very little practical use apart from jewelry and some applications in electronics, so prices are more determined by speculators.

Both metals are considered a safe hedge against inflation and as a store of value. For the small investor, however, a $30 silver coin is a lot more approachable than a $1,400 gold investment.

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Bucking a Trend: Why the Dollar Could Rally in 2011

Despite a likely third straight year of $1 trillion U.S. budget deficits, and the U.S. Federal Reserve's controversial quantitative easing program, the U.S. dollar has basically remained flat against the world's other major currencies. Compared to the British pound, it has barely budged over the past year, going from $1.6153 to $1.6093. At the same time, it fell a relatively small 4% against the Canadian dollar and went up 5% against the euro.

Admittedly, the dollar lost a substantial 10% of its value against Japan's yen, but unless you're willing to "park" your money in Japan's famously low-interest banks for almost no return, the yen is not a worthwhile option. By extension, that same drive for yield/return will probably discourage many institutional investors from trading in their dollars for yen.

If the dollar's resiliency in 2010 didn't surprise you enough, try this on for size: There's a decent chance the dollar may rally in 2011, rising in value against other major currencies. Here's why:

U.S. budget deficit reduction progress. First, it seems likely that there will be progress in reducing the budget deficit in 2011. That may be hard to believe, given that the Democrats and Republicans in the past week courageously said "you go first" regarding entitlement reform, but the important point is that the structure of the debate has changed. The debate is no longer focused on spending increases; instead, it's looking at how much will be cut and where the slashing will occur.
Analysis: Dollar bullish.

Euro-zone debt concerns. The European Union has made strides addressing its sovereign debt woes; for example, it's poised to increase the size of its bailout fund. Still, at least two large-debt nations, Spain and Portugal, remain under "24-hour observation." While the pair will probably will avoid a bailout, the chance that they might need one -- and the negative impact that such a bailout would have on the euro -- is likely to keep investors nervous about the euro for the next year.
Analysis: Slightly dollar bullish.

Dollar as global reserve currency. Eventually, globalization may lead to the adoption of several reserve currencies. In fact, the euro, yen, British pound and Swiss franc already play supporting roles. For the time being, however, institutional investors are not yet ready to abandon the dollar-dominated reserve currency system -- a status that continues to boosts the dollar's value.
Analysis: Dollar bullish.

U.S. economic expansion. Finally, there's the U.S. economy. After the longest and most painful recession since the Great Depression, the world's largest economy appears to be headed for a better-than-adequate performance in 2011. U.S.-based companies, including many multinationals, are lean, cash-flush (they've amassed about $2 trillion in cash), and are well-positioned to take advantage of the global growth cycle. That bodes well for earnings growth. And because these are largely dollar-denominated investments, it will increase demand for dollars.
Analysis: Dollar bullish.

So whether you're talking about the deficit reduction, Europe's debt woes, currency reserves or the multinational-led U.S. economic recovery, the stars appear to be lining up for a decent year for the dollar. Of course, the outbreak of another war involving the U.S., an unforeseen natural or man-made calamity (such as terrorism) or a major and sustained disruption in the flow of imported oil could all result in a bad year for the buck. But minus those, look for the dollar to hold its own in 2011.

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Silver Near a 31-Year High

Back in the late 1970s, the Hunt brothers from Texas tried to corner the silver market. That drove prices to $48 an ounce. Now, 31 years later, silver is shooting higher again. The March silver futures contract closed at $32.296 per ounce, up 72 cents.

Since gold is expensive, investors are turning to silver to hedge against inflation. Many fear that the Federal Reserve will not be able to control the spike in commodity prices. The Fed is buying $600 billion of treasuries and keeping interest rates near zero.

Silver is an industrial metal as well as a precious metal. With industrial production picking up, silver is more in demand. It is used in a host of products, mainly in electronics.

Some miners are hedging their silver production. They are selling forward contracts against their estimated production. The Commodity Futures Commission keeps a record of these commercial transactions. For the week ending February 15, commercial short positions totaled 50,796 lots, up from 44,340 at the start of the month.

For example, Boliden, a silver miner, has hedged 2.23 million ounces of it total 6.78 million ounces through 2013. In other words, they sold futures contracts against their physical silver. Hedging becomes a bit tricky in these fast moving markets. Barrick Gold (ABX) got caught when gold started moving sharply higher and had to unwind its hedges in 2009 and 2010.

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Further Deflation of the Housing Bubble

The Washington Post, which completely missed the $8 trillion housing bubble whose collapse wrecked the economy, is still having a hard time understanding house prices. It notes that the Case-Shiller 20-City index is a moving average of sales closings for the prior three months. And, there is typically a 6-8 week period between when a contract is signed and when it closes. It therefore tells readers that the December data to be released on Tuesday:

should reflect the autumn lull in the economy. The question is whether the improved economic outlook over the past few months will translate into a firming up of home prices in early 2011.

Actually no. Short-term ups and downs in the economy will not be reflected in house prices. The main factor pushing house prices lower right now is the end of the homebuyers tax credit. This credit, which could be used for homes contracted before April 30th (and likely closed before the end of June), pulled many sales forward from the second half of 2010 and even 2011 into the first half of the year. Prices began to fall as soon as the credit ended.

It is easy to see from the data that the credit was driving the housing market, not short-term economic fluctuations. House prices stopped falling and actually rose somewhat in the second half of 2009, a point where the economy was still losing jobs, as people rushed to buy homes before the expiration date of the initial credit in November of 2009.

The main factor in the housing market is the further deflation of the housing bubble. People who understand the housing market expect prices to continue to drop until the bubble is deflated. This means a price decline of another 10-15 percent over the next year.

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Why Are India ETFs in a Rut?

After a stellar year, India ETFs are lagging the broader market as economic problems weigh on the country. Though this might just be a short-term phase that will run its course, you’ve got options.

The recent weakness in India’s economic growth may just be temporary since the potential for monumental growth is still there, says Ron Rowland for Money and Markets. But right now, it’s got problems:
The biggest threat to India ETFs is inflation. It is especially evident when taking a look at the rise in India’s food costs since a large proportion of income for the pool of low-income workers is mostly spent on food.
Analysts cite that the macro-economic conditions and negative political sentiments do not favor the Indian equity market. High inflation, increased crude prices and a series of corruption scams are the main reasons behind the negative outlook for India.
A lack of infrastructure and a large population in dire poverty has been and remains a sticking point. It’s said that infrastructure problems cost India quite a bit in GDP growth.

That’s not to say India isn’t trying to deal with its issues. India’s Central Bank has taken steps to increase interest rates to bring down inflation, but stocks, more notably India’s bank stocks, are also declining, as well.

According to The Economic Times, a recent survey of fund managers conducted by Bank of America Merrill Lynch reveals that rising risk in emerging markets and the recovery back at home is bringing investors back to developed markets from emerging economies, with India as the least preferred investment destination in the Asia region. Ouch.

Rowland notes that this is only the effects of a natural economic cycle and India’s economy will be back on its feet.
iPath MSCI India ETN (INP). INP is an ETN, not an ETF. Share creation has been suspended for some time now, so watch the net asset value when trading.
WisdomTree India Earnings (EPI). EPI is a fundamentally weighted large-cap ETF; its largest allocation is to the financial sector, which accounts for 22% of the ETF.
PowerShares India (PIN). PIN is another large-cap India ETF. If you’re concerned about Indian banks, this fund may be a good option; it has a less than 10% allocation to the financial sector. One-quarter of it is exposed to the energy sector.
iShares S&P India Nifty 50 (INDY). INDY is newer and less actively traded than EPI or PIN. Financials and technology are the top sectors, with a 25% and 17.6% allocation, respectively. The 12.7% allocation to consumer staples can be a good way to play India’s powerful consumer base.
EGS Indxx India Infrastructure (INXX). INXX focuses on physical infrastructure spending. With all of India’s infrastructure woes, there’s a great opportunity and room for growth here.
Direxion Daily India Bear 2x (INDZ). INDZ is for those who believe that India’s markets will drop further, but do be sure you understand how leveraged and inverse ETFs work before diving in.

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Is Apple the 'Short of the Century'?

Former Wired columnist and CEO of ADVFN Clem Chambers came onto CNBC Friday and called Apple (AAPL) the short of the century. The main premise of his argument is that Apple is a large cap stock and should be valued like other large cap companies. He says,

If we value this company (Apple) as a normal large cap company, it should trade at $200 a share and no more.

He goes on to say that other large cap names within the sector trade at a 14 P/E while Apple trades above a 20 P/E ratio. Chambers argues that Apple's chart is a huge bubble, that Apple cannot function without Steve Jobs, and that "the dynamic with apple is everyone expects this story continue. One hiccup and the stock is back down to $200 a share." You can see his segment here.

Well...this guy is going to be unpleasantly surprised when he sees the stock trade at over $500 sometime within the next year. Apple has proven time and again that it can survive just fine without Steve Jobs. And while Apple does trade at a slight premium to other large cap companies, it does grow at 3-4 times faster than those companies. If anything, the stock is very undervalued at these levels. It only trades at a .77 PEG ratio which is far below par on its 5-year expected growth rate.

By contrast, Intel (INTC) trades at a .87 peg ratio, IBM (IBM) at a 1.14 peg ratio, Hewlett Packard (HPQ) at a .83 peg ratio and Google (GOOG) at a .99 PEG ratio. If anything, these companies are trading at a richer valuation to their expected growth rates than is Apple. While it seems somewhat insane to call Apple overvalued at these levels, it shouldn't come to a surprise to see people start to jump to that conclusion when looking at Apple's market capitalization.

I warned this past summer that Apple watchers would start to make sweeping valuation arguments based exclusively on its market capitalization. Clem Chambers targeted Apple's large market cap. as the main thrust underlying is "Apple is overvalued" thesis and don't surprised to see a lot more people make that argument as Apple marches to $500 and beyond. In the future, I'll be putting together a thorough analysis justifying a $500 price target. Stay tuned.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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The Top 3 Ways to Play Uranium

Uranium prices have gained more than 70% from their recession bottom. And that's only the beginning.

The element is bracing for a super-surge, and we've found three ways to profit from this uranium bull market that could continue to rise through the rest of the decade and beyond.

Uranium is heading back toward its historic highs. And prices could still double before they reach pre-recession levels. That's a potential 100% gain, or more, if prices continue to increase. And they will.

Global superpowers are fast-tracking nuclear energy and combing the globe for more uranium. And hundreds of nuclear reactors are being designed and built as you read this.

Alone, that's enough to drive uranium prices higher. But it's not the whole story.

Since the late 80s, the world has been making do with a deficit of mined uranium. Present mining projects only provide enough fuel for about 70% of demand. The other 30% has been coming from enriched uranium stockpiles and former nuclear weapons. That means prices have been artificially low going back as far as the end of the Cold War.

But these stockpiles and the glut of decommissioned nuclear weapons currently used to make up the mining shortfall are both running out. And supply isn't ramping up fast enough to cover the coming shortfall in fuel.

In this report, we will uncover the truth behind the coming uranium bull run and detail three ways investors can profit as uranium prices really take off.

Fact #1: The world's superpowers are zealously fast-tracking their nuclear energy agenda. According to the World Nuclear Association, a new nuclear reactor will start up every 5 days by the year 2015.

Countries like the U.S. and Japan are developing new nuclear power plants to generate energy at lower costs than traditional fossil fuels and to curb the emission of greenhouse gasses.

Unlike oil and coal, nuclear energy emits zero carbon dioxide. And while wind and solar technologies are still wearing their training wheels, nuclear energy has a proven track record of performance. Not to mention it is the most potent and efficient source of energy among its peers.

Countries like the U.S. and Japan are opening new plants to deal with stricter emissions legislation and support their energy needs. At the same time, emerging economies, like China and India, are turning to nuclear power as a solution to their sharply increasing electricity requirements.

A look at the numbers gives little doubt.

China has 13 operating nuclear reactors. And in the last year alone, the Chinese government approved plans to build 34 new plants.

India wants to quadruple its nuclear output in the next 10 years.

Japan is planning another 14 nuclear power plants. Russia wants 16 up and running by 2015.

And here's perhaps the biggest surprise: The United States leads the world in nuclear energy production with 104 active reactors and plans to build as many as 24 more.

Fact #2: There's one problem - We're running out of uranium! The world is parched for uranium. All totaled, the world's nuclear reactors use about 69,000 tons of uranium every year. But only 51,000 tons are mined every year. Many reactors are running at 50% capacity. Some have even been taken off-line.

In the United States, the bulk of the uranium used in reactors doesn't even come from uranium mining. It comes from the approximately 20,000 Russian nuclear warheads. The uranium from these nuclear weapons is enriched and sold to the U.S. as part of a 1987 disarmament agreement.

The "Megatons to Megawatts" program has helped make the United States the world's largest producer of nuclear power.

But the program is running out of nuclear warheads to convert, spelling the end of guaranteed access to uranium supplies for U.S. nuclear reactors. When the warheads dry up, the U.S. will have to import more uranium to satisfy its needs, and by then, domestic and global demand will be significantly higher.

Fact # 3: This is perhaps uranium's buying opportunity of the century. Uranium prices rocketed an astounding 1,625% before 2008. Whenever the price of anything moves that fast, it's bound for a correction. But that correction happened to coincide with the start of the worst recession since the Great Depression. It caused the bottom to fall out of uranium prices for the next two years.

But all uranium traders needed was a whiff of an economic recovery to send prices back up. Let's be clear, the current uranium surge won't be a rocket ride. This isn't a speculative frenzy that's going to drive uranium prices far above supportable levels just to let them collapse again. This is the basic economics of supply and demand. Currently, there isn't enough uranium supply to meet the growing global demand.

Unlike most commodities in today's unsteady market, uranium will be the one that rises noticeably - but steadily - over time. And that's not a maybe. That's a definite.

Energy companies know supplies will tighten. They know the current uranium mining industry is wildly volatile. They know uranium prices are a bargain now. That's why they're already paying a premium on current prices to lock in uranium now. And smart investors are following suit now before the price moves any higher.

Action to Take:

For a pure play uranium buy, take a look at Cameco Corp. (NYSE: CCJ), one of the world's largest producers of uranium. It's also the world's largest and most liquid uranium miner. And the company plans to double its uranium production, to 40 million pounds, by 2018.

This company is a leader, and its size ensures it will remain on the forefront of the uranium boom. And as an added bonus, Cameco maintains an impressive annual and quarterly dividend for investors.

If safety and diversification are more to your liking, then Rio Tinto PLC (NYSE: RIO) and BHP Billiton Ltd. (NYSE: BHP) are attractive options.

BHP Billiton is the second-largest commodities company in the world - mining steel, aluminum, copper, iron, nickel, titanium, diamonds and gold. BHP's connection to China and their ownership of the world's largest uranium deposit, the Olympic Dam in Australia, makes them a big player in the upcoming uranium boom.

Rio Tinto is the third-largest mining company in the world. One plus is that this company is already selling uranium to mega consumer China. In the future these ties may pay off in a big way.

Rio owns 68% of the Ranger Mine, which has produced more uranium than any other mine in Australia over the past 10 years, and nearly 70% of Namibia's Rossing mine, the world's longest running open pit uranium mine and also an exporter to China.

These are the best uranium plays right now, but as time goes on, uranium demand is sure to open the doors to new streams of income for investors. And we will be first to let you know where to find those opportunities.

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South Korea: Emerging Market Exposure at a Discount

When we hear about gaining exposure emerging markets, most people immediately think of the BRIC countries (BKF). That should make sense, right? Well, not really since the MSCI lists a total of 21 emerging market countries, while the Dow Jones lists 35 emerging market countries. The takeaway here is that there are more than four emerging market countries.

Still, we can’t blame the average investor for not knowing more since so much media hype over the years has been focused solely on Brazil, Russia, India, and China. In our personal opinion, the emerging market with substantial economic trade ties to all the big names which remains under the “media radar sweep” is South Korea.

There are three primary reasons why iShares South Korea ETF (EWY) is the “smarter” way to gain diversified exposure to emerging market gains without buying a hot BRIC name at a premium.
Economic Trade Dumping in China


South Korea is thriving economically by dumping billions of dollars worth of products into China, plain and simple. According to the National Bureau of Statistics China for 2008, South Korea exported $112.14B worth of trade to China while China, on the other hand, only exported $73.93B back. We can see that this looks eerily similar to the lopsided US-China trade relationship, but in reverse.

This makes South Korea the 4th largest trading partner with China. Take out Hong Kong (EWH), which for some reason is listed as a “separate economic entity” by the National Bureau of Statistics China, and South Korea becomes the 3rd largest trading partner in the world for China. The takeaway here is that South Korea has tapped into the fastest growing country in the world and is now reaping the benefits.
America Loves to Buy Cheap Products

America is still arguably the largest consumer market in the world. There is no question that America loves cheap, somewhat reliable products and South Korea is more than happy to satisfy the endless demand. For 2008, the United States Census Bureau listed US imports from South Korea at $48.9B, while only exporting back $38.8B.

In absolute terms, the US has much larger trading partners, including Canada and China, but in relative terms, there exists another trade imbalance which South Korea uses to its benefit as an emerging market. South Korea, as an emerging market, continues to be in a “long-term macro growth phase” due to trade imbalance relationships like these. We feel that South Korea can and will continue to grow a wider export imbalance with the largest consumer discretionary market in the world.

An Unnoticed Relationship of Economic Love


Any relationship must involve giving and taking, because that provides a healthy balance. Well, when it comes to the EU-South Korean trade relationship, South Korea insists on being more of a giver than taker. Currently, the EU makes up the largest portion of global GDP, according to the 2010 List by the CIA World Factbook, and South Korea has taken notice of the fact. On October 6th, 2010 the EU-South Korea Free Trade agreement was signed into approval in Brussels. This now makes South Korea the EU's 8th largest trade partner. Now, when looking at the trade balance between these entities for 2009, we find that South Korea exported $32B in goods to the EU while it only sent back $21.5B in product.

In addition, European companies are on average the largest foreign direct investors in South Korea and account for roughly 40% of the total FDI. There is little question that South Korea has definitely created a very “special” and lucrative relationship with the EU (ETFs: IEV or EWG).
Conclusion

While ETFs for China (FXI), Brazil (EWZ), and the overall emerging markets (EEM) are often referred to as the “best” names for investing, we find one common but crucial issue with them. All these hot names remain very dependent on one or two key trading partners to keep their current rates of growth. On the other hand, South Korea has created a diversified portfolio of large trade partners, holds a favorable trade relationship with each of them, and is likely to keep on providing sound growth with less risk relative to other emerging market options.

This is why we feel the South Korea ETF (EWY) is the quieter “alpha seeking operator” for emerging markets and is a sound BUY for now.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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The Federal Reserve Vs. The Budget

Ben Bernanke does not like deficits and increases in the national debt. He also believes that the economy needs to be stimulated which is why he continues to maintain his faith in QE2.

The new Budget is not likely to pass Bernanke’s test. The deficit this year will be $1.6 trillion, to some extent because of tax cuts. Next year it will be $1.1 trillion. The national debt will rise by $7.2 trillion over the decade which the Budget forecast covers.

The tension between the Fed and the Budget cannot be seen more clearly than in a recent presentation by NY Fed chief William Dudley. He expresses only modest optimism about the recovery. The “headwinds” that face GDP improvement have hardly abated. Job creation of the sort that the Budget assumes may not be attainable.

Dudley remarked in his Quarterly Regional Economic Press Briefing. ”The decline in the jobless rate was not an unmitigated positive, as a significant part of this decline was due to fewer people looking for work.”. He added:

As banks and other financial institutions seek to strengthen their balance sheets and avoid future credit losses, they may keep credit conditions tighter than normal. In addition, many consumers’ borrowing options may be limited by their impaired credit histories, and the recovery is not getting the strong boost from home construction that most previous recoveries have benefited from,

Dudley did not mention economic challenges which are different from those raised by Fed members who support QE2 hundreds of times. He did say he could not be sanguine about resolutions.

The Fed’s view of the economy expressed through the comments by Bernanke and Dudley are part of the publicity campaign to promote the central bank’s $600 billion bond purchase program. Just because it is part of that agenda does not mean it is anything less than an accurate assessment of America’s economic problems.

Dudley looks at a future, at least in the near term, where the glass in half empty. The assumptions behind the Budget are based on a glass that is nearly full.

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The Big American Retailers With The Worst Service

Customer satisfaction in the retail and online e-commerce industries is getting worse. There is no single reason for this, but it is likely that the recent economic downturn is one of the biggest factors. A recession often cuts into retail payrolls, and so full-time workers are replaced by part-time ones. Anxiety among people who are not laid off rises. The employees in the stores who are the spokespeople for their companies have their morale shaken. A drop-off in customer service is bound to result.

Recessions also rob businesses of the ability to compete effectively on price. A downturn hurts sales. This takes away the flexibility for businesses to offer discounts, unless their balance sheets are strong enough to fund losses in exchange for improved market share. Big companies such as Wal-Mart can afford to take a long view. Much smaller ones including OfficeMax probably cannot.

The American Customer Satisfaction Index is as close to the gold standard for the measurement of customer service. ACSI reports scores on a 0-100 scale at the national level and produces indexes for 10 economic sectors, 45 industries (including e-commerce and e-business), and more than 225 companies.

The ASCI data which was just released on the retail and e-commerce industries shows an erosion in consumer satisfaction scores. It is the largest drop the research operation has reported since 2008 – at the depth of the recession.

National ACSI figures for all economic sectors were off to 73.5 in the fourth quarter compared to 75.7 in the third. The national retail number fell from 76.2 in 2009 to 75 in 2010. E-commerce dropped even more from 81.4 to 79.3 year compared to the previous year.

24/7 Wall St. reviewed the data to find the companies which were hardest hit in the ratings from 2009 to 2010. We picked only firms with satisfaction ratings down at least 2% year-over-year with the goal of finding common themes between the companies, or at least reasons why they are performing worse than their peers.

After reviewing the data, 24/7 Wall St. observed several key attributes in common between the companies on this list. Companies which were in the number 2 or number 3 spot behind a large industry leader often did very poorly. These companies include Target (NYSE: TGT), Lowe’s (NYSE: LOW), OfficeMax (NYSE: OMX) and Newegg. Firms which are not in the top spot for their sector often do not have the financial resources of their larger competitors. They are often the first to begin layoffs, meaning their staff-per-location falls along with morale, and often the number experienced workers. People who have been with a company the longest often earn the most. As they are laid off, institutional knowledge is bled out of a company. Cheap becomes expensive.

9. Newegg
> Industry: Internet Retail
> % Change In The Last Year: -2.3%
> % Change Since First Year Of Rating: -3.4%
> % Change of Industry In The Past Year: -3.6%

In 2008, Newegg led the Internet retail industry in customer satisfaction. The company is now behind both Amazon and Netflix, with a score of 84. Newegg.com, an online consumer electronics retailer originally focused on discount computer components, has now expanded to consumer electronics, including televisions and digital cameras. This shift to a wider range of products, and customers, has led to less impressive deals in many cases. Many people simply looking for a better price on a flat-screen TV are now confused by a website originally designed for tech-savvy consumers.

8. Barnes & Noble
> Industry: Specialty Retail Stores
> % Change In The Last Year: -2.4%
> % Change Since First Year Of Rating: -1.2%
> % Change of Industry In The Past Year: +1.3%

Barnes & Noble currently has a customer satisfaction score of 82, a decrease of 2.4% from 2009. The company may suffer more than any retailer on this list in comparison to a larger online rival. Amazon.com has many more titles online than Barnes & Noble has in stores. The online Barnes & Noble brand attracts far fewer visitors than Amazon, which also offers a wide array of products besides books. Furthermore, Amazon has been able to market its Kindle e-reader as superior to the Barnes & Noble Nook. All of these taken together are a good demonstration of why bricks-and-mortar operations are losing customers to their large e-commerce competitors. Customer satisfaction is based on selection, ease of access and price.

7. Target
> Industry: Department & Discount Stores
> % Change In The Last Year: -2.5%
> % Change Since First Year Of Rating: +4%
> % Change of Industry In The Past Year: +1.3%

Target’s customer satisfaction score dropped 2.5% to 78 in 2010, decreasing its rank from second to sixth. The average score for department and discount stores is 76, which has increased 1.3% from a score of 75 in 2009. Target operates in the shadows of rival Wal-Mart, which leads the industry in everyday low prices and has to compete in a part of the retail industry that is driven almost exclusively by price. The primacy of price among the largest national chains may be reflected in how poorly they all do in customer service. Sears and Wal-Mart performed even worse, with scores of 75 and 73, respectively. It appears that the stores in this category have divided themselves into two sectors. In one, stores have low prices and relatively few frills. The companies at the top such as Nordstrom have elected to combine strong in-store service and higher prices.

6. Lowe’s
> Industry: Specialty Retail Stores
> % Change In The Last Year: -2.5%
> % Change Since First Year Of Rating: +2.7%
> % Change of Industry In The Past Year: +1.3%

Lowe’s customer service rating drop of 2.5% was quite sharp compared to that of its rival, Home Depot, which underwent an increase of 4.2%. Demand for housing supplies is weak because of the huge drop in home prices. This caused fiscal year sales to drop in 2009 and 2010. Lowe’s recently cut the number of its middle management staff, which is likely to hurt morale. Several analysts pointed out that the cuts in full-time staff in favor of either cost savings or part-time workers badly hurt the company’s ability to provide customer service.

5. TJX
> Industry: Specialty Retail Stores
> % Change In The Last Year: -2.6%
> % Change Since First Year Of Rating: +2.7%
> % Change of Industry In The Past Year: +1.3%

TJX currently has a score of 76, a 2.6% decrease from 2009. This is one of the lowest scores among specialty retail stores, where the average is 78. TJ Maxx is caught between large chains such as Macy’s and Target and more specialized stores such as Abercrombie & Fitch. It is also likely TJ Maxx does not have a strong enough brand to engender the kind of loyalty that helps drive the industry. The company’s lack of a major online presence almost certainly hurts it among its target of young consumers.

4. SUPERVALU
> Industry: Supermarkets
> % Change In The Last Year: -3.9%
> % Change Since First Year Of Rating: -3.9%
> % Change of Industry In The Past Year: -1.3%

SUPERVALU has a score of 74, which is a 3.9% drop from 2009. This is lower than the industry average, which is 75. Competitors which do much better include Publix, which scored 84, and Whole Foods, which scored 79. SUPERVALU has 160,000 employees, and it operates over 2400 discount food retail scores and 855 Save-A-Lot stores. SUPERVALU is one of the smallest national chains in its business. Kroger and Safeway are much larger. The grocery store industry in general has been hurt by the rapid rise of agricultural commodities including corn, wheat, and coffee. Supermarkets have done what they can to pass these costs onto shoppers, a practice which is unlikely to help customer satisfaction. SUPERVALU has also suffered during the recession. Revenue has dropped over 5% in the last fiscal year, and the company had razor-thin margins. Consequently, SUPERVALU trades near its 52-week low. The lesson from SUPERVALU is that selling commodity-based products during a period of rapid inflation will almost certainly alienate customers, even if the balance of the company’s relationship with consumers is strong.

3. OfficeMax
> Industry: Specialty Retail Stores
> % Change In The Last Year: -3.9%
> % Change Since First Year Of Rating: -2.6%
> % Change of Industry In The Past Year: +1.3%

OfficeMax has the lowest score in the specialty retail category, at 74. The company underwent a 3.9% decrease in customer satisfaction since 2009, the greatest in this category. OfficeMax competes with much larger chain Staples and Office Depot. The difference in customer satisfaction between OfficeMax and its two rivals is significant. Both Office Depot and Staples have scores of 81, and the industry in general has a score of 78. OfficeMax also has to compete against big box retailers Sam’s Club and Costco, which have successfully entered the small business supply market. The company cannot afford to lag behind its larger competitors which have stronger supply chains, marketing operations, and probably inventory availability, all of which almost certainly affect consumer impressions.

2. CVS Caremark
> Industry: Health & Personal Care Stores
> % Change In The Last Year: -3.9%
> % Change Since First Year Of Rating: 0.0%
> % Change of Industry In The Past Year: -1.3%

CVS is one of the largest retailers in the United States, with revenue topping $100 billion. The company operates more than 7,000 retail drugstores in 41 states and 569 health care clinics in 25 states. CVS currently has the lowest rating among Health & Personal Care Stores, at 74, which is a 3.9% decrease from 2009. Industry customer satisfaction among CVS and its peers dropped 1.3% to a grade of 77. The highest scoring chain in this category is Walgreens, at 77, which means the spread in customer satisfaction is relatively small and consumer perceptions of the entire industry are relatively low. Pharmacies operate on tight profit margins and, with the exception of the pharmacists themselves, workers are often paid little more than the minimum wage. The other thing that tends to work against drug store chains is the rapidly changing landscape in the health care industry, which has confused consumers, and in some cases has raised the cost of health care.

1. Priceline
> Industry: Internet Travel
> % Change In The Last Year: -3.9%
> % Change Since First Year Of Rating: +10.6%
> % Change of Industry In The Past Year: +1.3%

Priceline currently has the lowest rating among Internet travel companies. From 2009 to 2010, customer satisfaction with the online travel industry rose 1.3% to 78. Priceline’s score dropped 3.9% to 73, the greatest decrease within the industry. This gave it the lowest score in the group. Priceline has been a darling of Wall Street, and its price has risen from a 52-week low of $173 to its current level of $460. Priceline has begun to suffer from the fracturing of the online travel industry as carriers work to sell more tickets directly from their own sites. The other insurmountable factor for all travel e-commerce sites is that consumers cannot differentiate between the service given by sites like Priceline and the service given by the airlines themselves. The airline industry has notoriously poor customer satisfaction, and the blurring of these lines tends to harm the online independent middleman.

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The Twitter-24/7 Wall St. Market Report (2/18/2011) China Rate Increase, Zynga IPO

Twitter has, by most estimates, 175 million members, which makes it one of the largest social networks in the world. All major media companies are on Twitter and some have more than one million Twitter users. It raises the question of whether there is wisdom in crowds.

24/7 Wall St. will look at the Twitter posts at Reuters Biz, WSJ, Financial Times, CNN Money, MarketWatch, CNBC, and 24/7 Wall St. each day to see which stocks are most frequently mentioned. It is clear that in this area of social media these tweets are a sign of which companies the Twitter universe is interested in. Together, these financial sites are followed by nearly 1,000,000 Twitter users, which makes them a sizeable sample of Wall St.’s interests. In some cases, we will publish the actual tweets from the sites

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The Top 10 Tax Mistakes That Couples Make, and How To Avoid Them

While you’re mining this year’s tax instructions for savings on deductions and credits, don’t forget the special rules that come with your marital status. The so-called “marriage penalty” affects only couples with roughly equal incomes that year. Everyone else gets an Ozzie-and-Harriet “marriage bonus.” Here are the top 10 questions you and your spouse should ask yourselves in order to make sure you’re getting your maximum tax benefits:

1. Do you have two retirement plans? If not, start them now. When one spouse isn’t working, the other can fund an Individual Retirement Account in his or her name. You can salt away up to $5,000 for a spouse under 50, and $6,000 if your spouse is 50 or older. Contributions to a traditional IRA made by April 18 are deductible on your 2010 return. (A Roth IRA isn’t deductible; instead, its earnings accumulate tax free.)

2. Did a spouse who’s been out of the workforce get a job last year? The second income could push you both into a higher bracket. In that case, you might not have had enough withheld for taxes last year. Fill in your tax forms right now so you’ll know how much money you’ll have to raise by the filing date, April 18 (for calendar reasons, you get three day’s grace this year).

Whenever joint income shoots up, employees should revisit their W-4 forms, which tell their companies how much to withhold from each paycheck. Do the same if deductions increase — for example, if you welcome a new child.

3. Did you marry or divorce last year? Don’t file with a name that doesn’t match your Social Security number. It will delay your refund while the IRS clarifies your status, says Larchmont, N.Y. tax attorney Julian Block, author of Julian Block’s Tax Tips for Marriage and Divorce. If you changed your name, notify the Social Security Administration. Until the change is registered, file your tax returns under the name you held before.

Your marital status on December 31 dictates your tax status for the entire year. A wedding that day gives you a joint return, a divorce takes it away.

4. If you married last year, did each of you sell a home that you owned individually? If so, you both can exclude as much as $250,000 in profits when you file your joint return — $500,000 in all.

5. Did your spouse die within the past three years? Don’t make the mistake of filing as a single person or head of household when you don’t have to. You’re entitled to file a joint return for the year your spouse dies. If you have a dependent child and remain unmarried, you also get favorable joint-return rates for the two years after your spouse’s death. Your 2010 taxes will be forgiven if your spouse in the military died last year in a combat zone or as a result of a terrorist attack or military action.

6. Are you a low-earning spouse who suffered high out-of-pocket medical expenses last year? Consider the possibility of filing separately from your spouse. The tax code lets you deduct only the qualified medical expenses that exceed 7.5 percent of your adjusted gross income. On a joint return, that might not amount to much, but it could be significant on an individual return, Block says. Likely candidates for “married filing separately” are spouses without health insurance or those who entered a nursing home. Nursing home, home-care costs, and private nursing are generally deductible as a medical expense.

Married couples filing separately lose a number of tax breaks, including the dependent-care credit and student loan interest deduction. Your top tax rate might be higher, too. To make this strategy worth your while, the expenses have to be large enough to exceed the cost.

In community property states, separate tax returns generally make no financial sense. Your joint income has to be divided equally, so you both report the same amount.

7. Do you suspect that your spouse is diddling the IRS? Don’t sign the tax return. If you do, you become fully liable for that year’s unpaid tax, including penalties. If the fraud is uncovered and your spouse takes off for Venezuela, the IRS will come after you for the money. Unfortunately, it’s hard for suspicious spouses to say “no” to joint filing unless the marriage is already coming apart. If that’s the case, however, don’t pick up the pen. You’re liable for unpaid taxes on joint returns even after you divorce.

If the IRS audits the return and demands more money, the “innocent spouse” rule might save you from paying the arrears. But “innocent” is hard to prove. You have to show that you didn’t know about the lies, had no reason to know (for example, you weren’t living higher on the hog than your incomes would normally allow), and that it would be unfair to make you pay. In fiscal year 2010, more than 50,000 spouses applied for relief. Only 15 percent of them got entirely off the hook; 13 percent escaped with paying only part of the tax. Everyone else had to ante up.

8. Are you married but living apart from your spouse? You’re not stuck with the higher cost of “married, filing separately.” You can file as head of household if you meet the following conditions: you were separated for the last six months of 2010, you had a separate residence, paid more than half the cost of its upkeep, made a home for your dependent child for more than half the year, and never, ever, let your spouse stay overnight — not even on the couch.

9. Are you a same-sex married couple? Don’t make the mistake of filing a joint federal tax return. Even if your names could signal either sex (say, Cameron and Mitchell), the IRS could check your gender using your Social Security number. Married or not, you can claim your mate as a dependent on your federal return, if you’re supporting him or her. Your partner has to have had a reportable income of less than $3,650 last year and lived with you for the entire year except for short absences.

10. Can you take a medical deduction for the cost of divorce if your psychiatrist says that your marriage made you sick? Nice try but no cigar. Courts have already heard this one (in fact, they’ve heard practically every excuse for not paying taxes). They’ve said that getting out of a bad marriage is reward enough.

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The Net Worth Of The American Presidents: Washington To Obama

George Washington,the nation’s first President, was also one of the wealthiest men to hold the office. His Virginia plantation, “Mount Vernon,” consisted of five separate farms on 8,000 acres of prime farmland. Washington made significantly more than subsequent presidents: his salary was two percent of the total U.S. budget in 1789.

Our 16th President, Abraham Lincoln, was not one of America’s wealthiest - any opportunity to make money after his term of office was cut short. He was born in a log cabin and served as an attorney for 17 years before his presidency. He owned a single-family home in Springfield, Illinois.

Editor’s Note: This article was first published on May 17, 2010. The net worth of any of the Presidents on this list who are no longer living cannot change, except as measured by inflation. The fortune of the presidents who remain living have changed somewhat, but it would be nearly impossible to measure the full effect of that over the last nine months. The value of Bill Clinton’s real estate may have risen. Jimmy Carter’s publishing royalties may have improved. None of these events is likely to have a substantial effect on the rankings.

The Net Worth of America’s Presidents is a study that can be updated from time-time-time, but the figures relative to the passage of a few years will almost certainly never be more than modest.

24/7 Wall St. has examined the finances of all forty-three presidents. This article provides net worth figures for each in 2010 dollars. Because a number of presidents, particularly in the early 19th Century, made and lost huge fortunes in a matter of a few years, the number for each man is based on his net worth at its peak.

In the case of each president we have taken into account hard assets like land, estimated lifetime savings based on work history, inheritance, homes, and money paid for services, which include things as diverse as their salary as Collector of Customs at the Port of New York to membership on Fortune 500 boards. Royalties on books have also been taken into account, along with ownership of companies and yields from family estates.

The net worth of the presidents varies widely. George Washington was worth over half a billion in today’s dollars. Several presidents went bankrupt.

The fortunes of American presidents are tied to the economy in the eras in which they lived. For the first 75 years after Washington’s election, presidents generally made money on land, crops, and commodity speculation. A president who owned hundreds or thousands of acres could lose most or all of his property after a few years of poor crop yields. Wealthy Americans occasionally lost all of their money through land speculation—leveraging the value of one piece of land to buy additional property. Since there was no reliable national banking system and almost no liquidity in the value of private companies, land was the asset likely to provide the greatest yield, if the property yielded enough to support the costs of operating the farm or plantation.

Because there was no central banking system and no commodities regulatory framework, markets were subject to panics.

The panic of 1819 was caused by the deep indebtedness of the federal government and a rapid drop in the price of cotton. The immature banking system was forced to foreclose on many farms. The value of the properties foreclosed upon was often low because land without a landowner meant land without a crop yield.

The panic of 1837 caused a depression that lasted six years. It was triggered by a weak wheat crop, a drop in cotton prices, and a leverage bubble in the value of land created by speculation. These factors caused the US economy to go through a multi-year period of deflation.

The sharp fluctuations in the fortunes of the first 14 presidents were a result of the economic times.

Beginning with Millard Fillmore in 1850, the financial history of the presidency entered a new era. Most presidents were lawyers who spent years in public service. They rarely amassed large fortunes and their incomes were often almost entirely from their salaries. From Fillmore to Garfield, these American presidents were distinctly middle class. These men often retired without the money to support themselves in a fashion anywhere close to the one that they had as president. Buchanan, Lincoln, Johnson, Grant, Hayes, and Garfield had almost no net worth at all.

The rise of inherited wealth in the early 20th Century contributed to the fortunes of many presidents, including Theodore Roosevelt, Franklin D. Roosevelt, John F. Kennedy, and both of the Bushes. The other significant change to the economy was the advent of large professionally organized corporations. These corporations produced much of the oil, mining, financial, and railroad fortunes amassed at the end of the 19th Century and the beginning of the 20th. The Kennedys were wealthy because of the financial empire built by Joseph Kennedy. Herbert Hoover made millions of dollars as the owner of mining companies.

The stigma of making money from being a retired president also began to disappear. Calvin Coolidge made a large income from his newspaper column. Gerald Ford, who had almost no money when he was a Congressman made a small fortune from serving on the boards of large companies. Clinton made millions of dollars from writing his autobiography.

24/7 Wall St. performed an analysis of presidential finances based on historical sources. Most media evaluations of the net worth of presidents have come up with a very wide range, a spread in which the highest figure was often several times the lowest estimate. Most sources provided no hard figures at all. Most of these efforts have focused largely on the analysis of recent chief executives. That is because it is much easier to calculate figures in a world where assets and incomes are a matter of public record.

One of the most important conclusions of this analysis is that the presidency has little to do with wealth. Several brought huge net worths to the job. Many lost most of their fortunes after leaving office. Some never had any money at all.

The following is the net worth of all forty-three presidents.

Images President (Term) Estimated Net Worth Historical Points of Interest
1st George Washington (1789-1797) $525 million His Virginia plantation, “Mount Vernon,” consisted of five separate farms on 8,000 acres of prime farmland, run by over 300 slaves. His wife, Martha Washington, inherited significant property from her father. Washington made significantly more than subsequent presidents: his salary was two percent of the total U.S. budget in 1789.

2nd John Adams (1797-1801) $19 million Adams received a modest inheritance from his father. His wife, Abigail Adams, was a member of the Quincys, a prestigious Massachusetts family. Adams owned a handsome estate in Quincy, Massachusetts, known as “Peacefield,” a working farm, covering approximately 40 acres. He also had a thriving law practice.

3rd Thomas Jefferson (1801-1809) $212 million Jefferson was left 3,000 acres and several dozen slaves by his father. “Monticello,”
his home on a 5,000 acre plantation in Virginia, was one of the architectural wonders of its time. He made significant money in various political positions before becoming president, but was mired in debt towards the end of his life.

4th James Madison (1809-1817) $101 million Madison was the largest landowner in Orange County, Virginia, with land holding consisting of 5,000 acres and the “Montpelier” estate. He made significant money as secretary of state and president. Madison lost money at the end of his life due to the steady financial collapse of his plantation.

5th James Monroe (1817-1825) $27 million Monroe’s wife, Elizabeth, was the daughter of wealthy British officer. He made significant money during eight years as president, but entered retirement severely in debt and was forced to sell Highland plantation, which included 3500 acres.

6th John Quincy Adams (1825-1829) $21 million Adams inherited most of his father’s land. His wife was the daughter of a wealthy merchant. He devoted most of his adult life to public service, notably after leaving office.

7th Andrew Jackson (1829-1837) $119 million While he was considered to be in touch with the average middle class American, Jackson quietly became one of the wealthiest presidents of the 1800’s. “Old Hickory” married into wealth and made money in the military. His homestead ”The Hermitage” included 1,050 acres of prime real estate. Over the course of his life, he owned as many as 300 slaves. Jackson entered significant debt later in life.

8th Martin Van Buren (1837-1841) $26 million Van Buren made substantial income as an attorney. He was one of only two men to serve as secretary of state, vice president, and president. He owned the 225-acre “Lindenwald” estate in upstate New York.

9th William Henry Harrison (1841) $5 million Harrison married into money – wife’s father was prominent judge and landowner. When Harrison’s mother died, he inherited 3,000 acres near Charles City, Virginia, which he later sold to his brother. He also owned “Grouseland” mansion and property, in Vincennes, Indiana. Despite his assets, Harrison died penniless, causing Congress to create a special pension for his widow.

10th John Tyler (1841-1845) $51 million Tyler Inherited 1,000-acre tobacco plantation. His first wife, Letitia, was wealthy. Tyler bought “Sherwood Manor,” a 1,600 acre estate, previously owned by William Henry Harrison. He became indebted during the Civil War and died poor.

11th James Knox Polk (1845-1849) $10 million Like his wife, Sarah Childress, Polk’s father was a wealthy plantation owner and speculator. Polk made significant sums as speaker of the house and governor of Tennessee, and owned 920 acres in Coffeeville, Mississippi, as well as 25 slaves.

Images President (Term) Estimated Net Worth Historical Points of Interest
12th Zachary Taylor (1849-1850) $6 million Taylor inherited significant amounts of land from his family, which at one point included property in Mississippi, Kentucky, and Louisiana. He made substantial money in land speculation, the leasing of warehouses, and investments in bank and utility stocks. Taylor owned a sizeable plantation in Mississippi and a home in Baton Rouge.

13th Millard Fillmore (1850-1853) $4 million Neither Fillmore nor his wife had significant inheritance. He founded a college that is the current State University of New York at Buffalo, and his primary holding was a house in nearby East Aurora, NY.

14th Franklin Pierce (1853-1857) $2 million Pierce’s father was frontier farmer, and his wife was well-to-do aristocrat. He served as attorney for 16 years and held property in concord, NH.

15th James Buchanan (1857-1861) less than $1 million Born in log cabin in Pennsylvania, Buchanan was one of 11 children. He was the only president never to marry. He worked for nine years as attorney, and spent 16 years in public office, including four years as secretary of state.

16th Abraham Lincoln (1861-1865) less than $1 million To the log cabin born. Lincoln served as an attorney for 17 years before his presidency. He owned a single-family home in Springfield, Illinois.

17th Andrew Johnson (1865-1869) less than $1 million Johnson’s father was a tailor, and his wife was a shoemaker. He served the public for 20 years, including as Governor of Tennessee and U.S. Senator. Johnson owned a small house in Greenville, TN.

18th Ulysses Simpson Grant (1869-1877) less than $1 million Grant’s father was a tanner, and his wife was the daughter of a wealthy merchant. He lost his entire fortune when swindled by his investing partner. Grant owned a modest home in Galena, Illinois. Although he died with little money, his autobiography kept family afloat.

19th Rutherford Birchard Hayes, (1877-1881) $3 million Hayes’ father was a shopkeeper. He was an attorney for 15 years and owned “Spiegel Grove,” a 10,000 square foot home that sat on 25 acres in Fremont, Ohio. Hayes also served as Governor of Ohio and was a member of the House.

20th James Abram Garfield (1881) less than $1 million Garfield was born in a log cabin in Ohio. He spent 18 years in the House of Representatives. Garfield owned “Lawnfield,” a home and small property in Mentor, Ohio. He died penniless.

21st Chester Alan Arthur (1881-1885) less than $1 million The son of an Irish preacher, Arthur’s wife came a from military family. He made substantial sums as Collector for the Port of New York. His townhouse in New York was well-appointed with furniture commission from Tiffany.

22nd and 24th Grover Cleveland (1885-1889, 1893-1897) $25 million Cleveland’s father was a bookseller and preacher, and his wife was the daughter of wealthy lawyer. Cleveland served as an attorney for twelve years, and also made significant sums on sale of his estate outside of Washington, D.C. He bought “Westland Mansion” near Princeton, New Jersey.

Images President (Term) Estimated Net Worth Historical Points of Interest
23rd Benjamin Harrison (1889-1893) $5 million Harrison had no significant inheritance of his own or from his wife’s family. He was a highly paid attorney for 18 years, and served as attorney for Republic of Venezuela. Harrison owned large Victorian home in Indianapolis, Indiana.

25th William McKinley (1897-1901) $1 million Mckinley had no significant inheritance. Served 30 years in public office, including local prosecutor and member of the House of Representatives. Went bankrupt during depression of 1893 while he was Governor of Ohio.

26th Theodore Roosevelt (1901-1909) $125 million Born to a prominent and wealthy family, Roosevelt received a significant trust fund. He lost most of his money on a ranching venture in the Dakotas and had to work as an author to pay bills. Roosevelt spent most of his adult years in public service. His 235-acre estate, “Sagamore Hill,” sits on some of the most valuable real estate on Long Island.

27th William Howard Taft (1909-1913) $3 million Taft’s wife’s father was a law partner of former president, Rutherford B. Hayes. Taft was president of the American Bar Association, an active attorney for nearly two decades, and only president to serve on the U.S. Supreme Court.

28th Woodrow Wilson (1913-1921) less than $1 million Wilson received modest compensation as head of Princeton and Governor of New Jersey. He never served in any position that provided him with a reasonable income. Wilson had a stroke in office and died five years later.

29th Warren Gamaliel Harding (1921-1923) $1 million Harding obtained wealth through marriage to his wife Mabel, daughter of a prominent banker. He owned the Marion Daily Star and a small home in Marion, Ohio. Most of Harding’s net worth came from his newspaper ownership.

30th Calvin Coolidge (1923-1929) less than $1 million Coolidge’s father was prosperous farmer and storekeeper. “Silent Cal” Spent five years as an attorney, and almost two decades in public office, which included time as Governor of Massachusetts. His net worth derived primarily from his home, “The Beeches,” in Northampton, Massachusetts, the advance from his autobiography, and the money he made from his newspaper column.

31st Herbert Clark Hoover (1929-1933) $75 million An orphan, Hoover was raised by his uncle, a doctor. He made a fortune as a mining company executive, had a very large salary for 17 years and had extensive holdings in mining companies. Hoover donated his presidential salary to charity. He also owned “Hoover House” in Monterey, California.

32nd Franklin Delano Roosevelt (1933-1945) $60 million Roosevelt had wealth through inheritance and marriage. He owned the 800-acre “Springwood” estate as well as properties in Georgia, Maine, and New York. In 1919, his mother had to bail him out of financial difficulty. He spent most of his adult life in public service. Before he was president, Roosevelt was appointed assistant secretary of the navy by Wilson.

33rd Harry S. Truman (1945-1953) less than $1 million Truman was a haberdasher in Missouri and nearly went bankrupt. He served 18 years in Washington, D.C. Despite his modest income, he was able to save some of his presidential salary.

Images President (Term) Estimated Net Worth Historical Points of Interest
34th Dwight David Eisenhower (1953-1961) $ 8 million Eisenhower had no inherited wealth. He served the majority of his career in the military and five years as president of Columbia. Ike owned a large farm near Gettysburg, Pennsylvania.

35th John Fitzgerald Kennedy (1961-1963) Although he never inherited his father’s fortune, the Kennedy family estate was worth nearly $1 billion dollars. Born into great wealth, Kennedy’s wife was oil heiress. His Father was one of the wealthiest men in America, and was the first chairman of the SEC. Almost all of JFK’s income and property came from trust shared with other family members.

36th Lyndon Baines Johnson (1963-1969) $98 Million Johnson’s father lost all of the family’s money when LBJ was a boy. Over time, he accumulated 1,500 acres in Blanco County, Texas, which included his home, called the “Texas White House.” He and his wife owned a radio and television station in Austin, TX, and had a variety of other moderate holdings, including livestock and private aircraft.

37th Richard Milhous Nixon (1969-1974) $15 million Nixon was born without any inheritance, and was a public servant for most of his life including a term as a Senator from California. “Tricky Dick” made significant sums from series of interviews with David Frost and book advances. He sold his New York townhouse to the Syrian ambassador to the U.S. and purchased a large home in Saddle River, NJ. At various times, Nixon also owned real estate in California and Florida.
38th Gerald Rudolph Ford Jr. (1974-1977) $7 million Ford had no inheritance, and he spent virtually his entire adult life in public service. Over the course of his lifetime, he owned properties in Michigan, Rancho Mirage, and Beaver Creek, Colorado. After he left the White House in 1976, he made nearly $1 million a year from book advances and from serving on the boards of several prominent American companies.

39th James Earl Carter, 1977-1981 $7 million Carter was the son of a prominent Georgia businessman. He was a peanut farmer for almost two decades. Carter left office deeply in debt, but made substantial sums from writing 14 books. Part of a family partnership that owns 2,500 acres in Georgia.

40th Ronald Wilson Reagan, 1981-89 (Republican) $13 million Reagan had no inheritance, but his first wife, an actress, had her own money. He was a movie and television actor for over two decades. “The Gipper” owned several pieces of real estate over his lifetime, including 688-acre property near Santa Barbara, California. Reagan was highly paid for his autobiography and as a GE spokesman.

41st George Herbert Walker Bush (1989-1993) $23 million Bush was the son of Prescott Bush, a Connecticut Senator and successful businessman. Aided by his friends in the financial community, he made a number of successful investments. One of his major assets is his home and 100+ acre estate in Kennebunkport, Maine.

42nd William Jefferson Clinton (1993- 2001) $38 million Clinton was born with no inheritance, and he made little significant money during 20 plus years of public service. After his time in White House, however, he made a substantial income as an author and public speaker. Clinton received large advance from autobiography. His wife, the secretary of state, has also made money as author.

43rd George W. Bush (2001-2008) $20 million Bush was born into a wealthy family. Over ten years, he made substantial sums of money in the oil business. The largest contribution to his net worth was the profitable sale of the Texas Rangers.

44th Barack Hussein Obama (2008-present) $5 million Obama is the grandson of a goat herder. He is a former constitutional law professor and civil rights attorney. Book royalties constitute most of Obama’s net worth.

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GrowOp: The Hydroponic IPO For Medical Marijuana

Medical marijuana is easily one of the most controversial businesses in America today. It is also one super-fast growth industry. 24/7 Wall St. is always on the lookout for issues where Wall Street meets Main Street, and if this does not fit that bill then nothing else does. If you heard that a technology player in the field of medical marijuana was about to have an Initial Public Offering you might not believe it. Well, it is. A California company called GrowOp Technology Ltd. plans to have an IPO later this year. We just interviewed GrowOp’s CEO and found out more about the company.

Derek Peterson, GrowOp’s founding-CEO and a director, was an investment banker at Wachovia and Morgan Stanley. Clearly, he is not blowing smoke. GrowOp is based in Oakland, Calif. and is the technology behind hydroponic growing systems and it has retail branded franchises in the works.

Legal medical marijuana sales are astronomical. Even the smaller dispensaries often have annual sales of $4 million to $5 million, according to Peterson . The larger well-run dispensaries have annual revenues of $10 million or even more. California has more than 500 hydroponic retailers, and GrowOp estimates that they generate more than $250 million in annual sales. On a nationwide basis this is a billion dollar business and has seen growth rates of roughly 40% in the last several years.

GrowOp manufactures and sells indoor hydroponic and agricultural equipment. The company also created and distributes the portable hydroponic cultivation units called the BIG BUD and the little BUD. Cities and states are licensing large-scale cultivation facilities to legal growers now in states which have approved medical marijuana. Peterson noted, “Our goal is to become the Apple of hydroponic technology, and we feel by developing and offering innovative designs, clean packaging, and competitive prices the market share is there for our taking.”

The company began selling the growing equipment and systems last May and 2010 sales were roughly $800,000 in equipment distribution outside of franchise sales. So far, sales in January were close to $275,000 and the company’s target for equipment sales is about $4 million to $5 million in 2011 and $10 million to $15 million for 2012.

Generally speaking, a retail franchise fee will run about $25,000 and the franchisee will pay a 5% royalty fee on sales back to GrowOp. It also offers larger territory franchises that depend upon each local market. Michigan, California and Colorado are practically sold out and the total franchises sold so far would cover 70 to 75 stores around the country.

Peterson indicated that the company has close to 40 private shareholders who have invested nearly $1 million in aggregate and those holders currently own about 22% of the company with options to boost their stake up to 30%. GrowOp is also looking at a mini-max financing round of financing before the IPO, and Peterson said the company is “in the ninth inning of the IPO process after its audit is completed.”

It opened a 15,000 square foot flagship retail store called weGrow with partner Dhar Mann near the Oakland Airport. We wanted to get a bit more clarity on the separation of the two entities. Peterson noted, “GrowOp is the distribution company and is the foundation or bottom of the vertical, while weGrow is strictly retail and we will be supplying product as a separate entity with an entirely corporate structure. The franchise will not roll-up into the public offering our benefit is building our own outlet for product sales while at the same time selling to the existing base of brick and mortar as well as online retailers.”

Peterson further noted that the company has signed a contract to be the sole supplier to a couple of online retailers as well egrow.com and hydroponicpros.com, which should generate close to a million dollars a year in sales.

In a last statement, Peterson added: “Medical Cannabis, like any commodity, has multiple uses. Almost any product you see today, will have a multitude of peripheral opportunities around it; food products, clothing, retail, merchant services, transportation etc. And cannabis is no different the market opportunities are endless.”

As you can imagine, it is very likely that GrowOp and any company in the business around medical marijuana will not come without controversy. Can you imagine the “threats and risks” section contained in its S-1 filing? Taxation, regulation, political change, tampering, sabotage, crime, society-shifts, and religion are some of the risks to the business. If everything pans out as Derek Peterson and his business partners expect, GrowOp may become “GrowthOp” for investors.

There is a term for entrepreneurs in the businesses around legalized marijuana or medical marijuana… Hempreneurs. Green Generates Green.

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