In 2015, Must-See TV Will Often Be Netflix Exclusives

January 13, 2015, 1:00 am

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Filed under: Company News, Netflix, Amazon.com, Entertainment Industry, Investing

It's pretty clear that 2015 will be a big year for original programming on streaming services. Sunday night's Golden Globes validated the platform with Kevin Spacey from Netflix's (NFLX) "House of Cards" taking top honors as best actor in a TV drama. Amazon.com (AMZN) was an even bigger and surprising winner with "Transparent" coming out on top in the TV comedy category and lead actor Jeffrey Tambor emerging victorious as the best actor in a TV comedy.

These awards are for performances in 2014, but bigger things are in store during the year ahead. Netflix staged a head-turning presentation during the Television Critics Association's winter previews last week, letting the industry know that it's going to have a busy slate of compelling programming.

Netflix can afford to spend more on exclusive content. It closed out its third quarter with 53.06 million streaming subscribers, and a springtime rate increase last year only grows the number and quality of the shows and even movies that it can now bankroll.

Coming Attractions

The third season of "House of Cards" returns next month, and that's naturally going to be magnetic. However, there's a lot more going on beyond the Feb. 27 return of Spacey's political drama. On March 6,the Tina Fey-backed "Unbreakable Kimmy Schmidt" -- originally slated to be on NBC -- hits Netflx's growing catalog. "Bloodline," a drama from the creators of "Damages," rolls out just two weeks later.

This brings us to April, when Disney's (DIS) Marvel rolls out "Daredevil." We're not talking about the 2003 movie starring Ben Affleck, which topped $100 million in ticket sales. This will be a new series based on the comic book property.

May brings "Grace and Frankie," starring Jane Fonda and Lily Tomlin as two women who bond after their husbands run off with each other, to Netflix viewers. The hype started building on Sunday night with Fonda and Tomlin presenting together at the Golden Globes.

It Will Be Hard to Cancel Netflix

It was less than three years ago that Netflix began to pepper its catalog with original programming, starting with the February 2012 debut of "Lilyhammer." "House of Cards" and "Orange Is the New Black" followed a year later.

Netflix now has the financial flexibility to keep popping out new content every couple of weeks that subscribers can't get anywhere else. That's intentional. It will be difficult to cancel the monthly service if there's a steady flow of perpetual programming.

Netflix investors had better hope that's the case. The stock took a big hit in October when its subscriber count fell short of Netflix's own forecast, and now subscriber attraction and retention are more important than ever.

This will be a defining year for streaming. Amazon on Sunday finally landed its first bona fide hit with the critical nod of approval for "Transparent." Time Warner's (TWX) HBO is gearing up to introduce a stand-alone streaming service in the U.S. later this year. This is all happening at a time when Netflix is beefing up its offerings.

Streaming services were the big winners on Sunday night. After seeing shares of Netflix and Amazon lose ground in 2014, it's the kind of success that can't come soon enough for shareholders.

Motley Fool contributor Rick Munarriz owns shares of Netflix and Walt Disney. The Motley Fool recommends and owns shares of Amazon.com, Netflix and Walt Disney. Try any of our Foolish newsletter services free for 30 days. Check out our free report on high-yielding dividend stocks.​

 

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Trump Sues for $100 Million Over Flights Above Ritzy Club

January 13, 2015, 1:25 am

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Filed under: Aerospace & Defense, Materials & Construction, Scandals and Lawsuits, Celebrities, This Built America

By MATT SEDENSKY

WEST PALM BEACH, Fla. -- Donald Trump, no stranger to noisy publicity, is complaining again about the roar of jets in a $100 million lawsuit over air traffic he says is purposely being directed to fly over his ritzy Palm Beach club.

Trump filed the suit against Palm Beach County last week, claiming his history of conflict with Palm Beach International Airport has led officials to spitefully redirect air traffic over his historic Mar-a-Lago estate in south Florida.

I am saving one of the great houses of this country and one of its greatest landmarks, and it's being badly damaged by the airplanes.

"I am saving one of the great houses of this country and one of its greatest landmarks," he said in an interview Monday, "and it's being badly damaged by the airplanes."

Rather than fanning air traffic in multiple directions, Trump says the county's airports director -- who has been named in prior litigation filed by the real estate mogul -- has successfully pressured the Federal Aviation Administration to have controllers direct almost all flights due east, directly above Mar-a-Lago, the lawsuit claims. It calls the actions "deliberate and malicious."

Noise, vibrations and emissions from the planes are causing cracks and other damage to porous stone construction, antique Spanish tiles, roofing, floors and columns, not to mention disrupting "the once serene and tranquil ambiance," the lawsuit says.

Trump says even his own Boeing (BA) 757 -- emblazoned with his surname in gold -- has been forced to take a flight path over Mar-a-Lago, where he has a home.

"It's doing tremendous damage to the No. 1 landmark in the state of Florida, between the vibration, the soot, the noise, all of these elements," Trump said.

The County Attorney's Office said it hadn't been served with the lawsuit and had no comment.

A 1995 lawsuit by Trump over airport noise ended with the county agreeing to lease Trump the land where he later built Trump International Golf Club. A 2010 lawsuit by Trump over airport noise was dismissed.

The Mediterranean-style Mar-a-Lago, completed in 1927, is a National Historic Landmark. Trump bought it in 1985 and after extensive restoration, opened it 10 years later as a private club. About 450 of the island's elite are members.

"There's no place in the world like it -- it's one of the great places in the world," Trump said. "And I have to protect it. I have to protect it."

 

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Your Mortgage Might Not Be the Best Deal, Feds Say

January 13, 2015, 1:27 am

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Filed under: Mortgages, Real Estate, Housing Market, Home Loans, Financial Education

When it comes to getting the best deal on what is most consumers' biggest purchase and borrowing decision, nearly half of us don't even shop around, according to a report released Tuesday by the Consumer Financial Protection Bureau. And that could be costing you money,

Three-quarters of all home buyers only apply to one lender, the bureau found. Not shopping around could have a significant impact on whether consumers are getting the best loans with the best terms or paying more than they have to, the agency said.

Consumers who are more educated about the process and shop around are far more likely to get a mortgage with the best possible terms and a potentially significant savings over those who don't.

The agency, which drew its data from a voluntary survey included in mortgage applications, is now promoting a consumer education tool -- the interactive online toolkit "Owning Your Own Home" -- to help consumers be better prepared when buying a house.

"Our study found that many consumers are not shopping for a mortgage," CFPB Director Richard Cordray said. "Consumers put great thought into the choice of a home, but the mortgage process continues to be intimidating. ... We want to enable consumers to be more savvy shoppers."

Shopping Around Pays Off

The data showed some 70 percent consumers relied on information from their lenders or mortgage brokers, the CFPB said, noting that while they are knowledgeable, they also had a vested interest.

Those who understood rates, types of loans and other aspects were far more likely to shop around for a good deal than those who weren't, the survey found.

It isn't unusual to have a spread of a half percent on a mortgage for someone with good credit. And the CFPB noted that on a loan for $200,000, saving that extra half percent could amount to about $60 a month, or about $3,500 in mortgage payments and greater equity growth.

The CFPB is also offering a mortage rate checking tool that allows consumers to put in the variables that a lender would consider -- credit score, down payment, home cost -- to get an idea of different loan types available and their interest rates.

The bottom line, the CFPB said, is the more a consumer knows going into the process the more likely they'll get a good result.

 

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Keurig Cold Heats Up with Dr Pepper Snapple Deal

January 13, 2015, 1:57 am

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Filed under: Company News, Coca-Cola Company, Market News, Food & Beverage, Investing

Folks looking for caffeinated blasts know Keurig Green Mountain (GMCR) for the popular Keurig platform that brews up coffee in one-cup servings. It may also be known for its carbonated beverage platform in a few months if it lives up to the hype.

Keurig Green Mountain took another big step last week ahead of the fall rollout of Keurig Cold, inking a deal with Dr Pepper Snapple Group (DPS) that will find the retail beverage giant putting out its soft drink brands as flavor options for the new machine.

It's a big deal. Beyond Dr Pepper, this is the beverage company behind A&W, Canada Dry, 7Up and Crush. These are some big brands that will join industry leader Coca-Cola (KO) in supporting Keurig Cold at its launch later this year.

Following the Leader

Coca-Cola was an early supporter, announcing its support when plans for Keurig Cold were revealed 11 months ago. Coca-Cola offered up its iconic pop brands as available flavors. It was also willing to put its money where its bubbly mouth is, ultimately investing roughly $2 billion for a 16 percent stake in Keurig Green Mountain. It was Coca-Cola's first big investment of 2014, which it followed a few months later by taking a position in fizzy energy drink behemoth Monster Beverage (MNST).

The Dr Pepper deal is a refreshing surprise. Keurig Cold is several months away from hitting the market. There are no guarantees that it will succeed. Keurig dominates the single-serve coffee market, but will the market warm up to a machine that makes juice drinks, carbonated beverages, energy drinks, iced teas and enhanced waters? Cobweb-covered attics and dusty top pantry shelves are filled with once-trendy beverage makers that have fallen out of favor.

However, the real reason Dr Pepper Snapple Group's endorsement is turning heads is Coca-Cola's financial stake in Keurig Green Mountain. If Keurig Cold is successful -- and Dr Pepper's presence makes the machine that much more likely to reach a large audience -- it will benefit its larger rival.

Frozen Over

Keurig Green Mountain has a lot riding on Keurig Cold. It's been hyping the beverage maker's arrival since early last year, and last month it invested $220 million to acquire Bevyz, a European company that's also working on a single-portion multi-drink system.

This isn't an easy market to crack. SodaStream (SODA) had initial success with its namesake maker of carbonated beverages, but stateside sales have been falling since late 2012. Keurig Green Mountain is hoping that its brand name and now its connections with two of the three biggest players in the soft drink industry will help it stand out. It's also banking on a platform that does more than fizz up flat water by providing a wide spectrum of beverage choices that could fare well in a climate that's souring on traditional carbonated sodas.

The future may be fuzzy, but Keurig Green Mountain is hoping that it's more than just fizzy.

Motley Fool contributor Rick Munarriz owns shares of Keurig Green Mountain and SodaStream. The Motley Fool recommends Coca-Cola, Keurig Green Mountain, Monster Beverage and SodaStream. The Motley Fool owns shares of Monster Beverage and SodaStream and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. Try any of our Foolish newsletter services free for 30 days. Want to make 2015 a winning investment year? Check out The Motley Fool's one great stock to buy for 2015 and beyond.​

 

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How to Find Out If You Have Debt in Collections

January 13, 2015, 2:00 am

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Filed under: Personal Finance, Credit Repair, Debt Assistance, Debt Collection, Financial Education

By Morgan Quinn

If you are behind on your bills or have an error on your credit reports, you might have a debt in collections. Having debt in collections can cause major damage to your credit scores and even create costly legal issues. If you think you might have a debt in collections and aren't sure what to do, here's what you need to know.

What Is a Collection?

A collection results from a debt not being paid on time. Usually, the debt is significantly delinquent -- more than 180 days late. A debt collector is the person or company that collects debts owed as part of their business. When a debt goes into collections, the original creditor assigns or sells the debt to a collection agency or debt collector. The debt collector then tries to collect the debt from the consumer.

How Can I Find Out if I Have Debt in Collections?

The easiest way to find out if you have a debt in collections is to pull a copy of your annual free credit report. Most collection agencies report to at least one of the three major credit bureaus (Experian, Equifax (EFX) and TransUnion), but it's a good idea to check all three of your reports -- the collection agency might only report to one of the credit bureaus and you want to cover all your bases. Any account that is in collections will be marked with a "collection" status.

Which Collection Agency Has My Debt?

Once you know you have debt in collections, you need to find out which collection agency you owe. There are a few different ways to do this:

• Wait for them to contact you. Debt collectors are notorious for aggressively hunting people down and it's likely they've already tried to contact you. Check your voice mail and mailbox to see if you have any messages or letters. If you have any missed calls from unknown numbers, search the number online to see if it came from a credit agency. If your contact information is out-of-date or inaccurate, keep reading.
• Look on your credit report. Your credit report might contain the name and contact information of the agency that is trying to collect on your debt. Check all three of the reports in case there is conflicting or missing information on any of your credit reports.
• Ask the original creditor. If you know your debt has been sent to a collection agency, but aren't sure which one, you can find out the contact information of that agency by calling the initial creditor (the business you originally had the account with). The original creditor might not be able to take any payments once the debt goes into collections or have any information on the status of the debt, which means you'll have to deal with the debt collector directly.

I Have Debt in Collections: Now What?

If you have a debt in collections, the first thing you should do is contact the debt collector. Ask for a written "validation notice" of the debt. By law, that notice must be sent within five days of the request and needs to include: the name of the creditor, the amount owed, and how you can dispute the debt or seek verification of the debt. Once you have received the validation notice and verified the debt and amount owed, you will need to resolve the matter. Here are some options:

• Pay the debt in full. Some consumers choose to pay the debt in full or make monthly payments on the debt. The more a consumer pays, the more the debt collector makes, so the collector will always push hard for this option -- it might even try to use intimidation practices or outright lie to you, which is illegal. You can save a lot of money and even have the item removed from your credit reports by negotiating the debt.
• Negotiate the debt. Debt collectors purchase debts at a discount and then attempt to make a profit by collecting the full amount owed; conversely, some are contracted to collect on the debt and make a commission on how much money they collect. In some cases, the original creditor restricts the collection agency from taking no less than 100 percent of the debt, but usually you can negotiate the amount owed.

  You can also try to negotiate a "pay for delete" deal -- an agreement to pay all or a percentage of the amount owed if the debt collector agrees to remove the entry from your credit report (this is important -- you want the entry removed, not just marked as "collection paid").

  It might take several rounds of negotiation to reach a settlement with a debt collector, but once you have come to an agreement, ask for the details in writing before you make any payments. All correspondence with the debt collector should be done in writing and sent via certified mail with a return receipt request. Once you have paid the collection, check your credit reports to make sure the collector has held up its end of the deal.

• Dispute the debt. If you believe the collections account reported on your credit reports is false or outdated, you can file a dispute with the credit bureaus. For example, if the debt in collections is over seven years old from the date of delinquency, the debt must be removed from your credit report. The FTC has a helpful checklist on how to dispute a debt with a debt collector.
• Know your rights. Debt collectors are restricted from engaging in certain behaviors and they must follow very strict guidelines. Here is a list of which practices are off limits, as well as what to do if your debt collector has broken any laws. Know your consumer rights so you can protect yourself.

 

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Alibaba Agrees to Block Sale of Dangerous Toys in U.S.

January 13, 2015, 3:05 am

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Filed under: Shopping, China, Consumer Issues, Consumer Protection, Toys

By Clare Baldwin and Adam Jourdan

HONG KONG -- Chinese e-commerce company Alibaba Group (BABA) has agreed to prevent the sale of up to 15 illegal or dangerous toys in the United States, the U.S. Consumer Product Safety Commission's chairman said Tuesday.

It is the first such agreement between the CPSC and a foreign company, CPSC Chairman Elliot Kaye said on the sidelines of the Hong Kong Toys and Games Fair.

"We're thrilled to cross beyond our borders and work with whomever we need to," Kaye said. The deal, however, isn't enforceable.

The CPSC will give Alibaba, the world's largest e-commerce company, a list of between five and 15 children's toys it wants to prevent from entering the U.S. market. Around 90 percent of U.S. toy imports come from China, according to the commission.

Alibaba corporate affairs executive Jim Wilkinson said in a statement that the company would work "collaboratively with the chairman and his team to do everything possible to protect consumers."

Alibaba, which handles more e-commerce business than U.S. companies Amazon.com (AMZN) and eBay (EBAY) combined, controls as much as 80 percent of the Chinese e-commerce market. Its initial public offering last year ranks as the world's biggest at $25 billion.

CPSC had not yet approached China's JD.com (JD) -- or other foreign e-commerce sites, Kaye said, but added: "It's coming. If we feel like it's a viable place to go, we'll go there."

Critics say Alibaba's size makes it hard to police.

"Alibaba has talked about getting all the defective stuff off [e-commerce platform] Taobao and that's likely a claim which is way bigger than is possible to be implemented," said James Feldkamp, CEO and co-founder of China-based consumer watchdog group Mingjian.

The agreement could nevertheless help Alibaba from a publicity standpoint, he added.

"It's saying: 'We're not looking to circumnavigate everywhere and flood the U.S. with a bunch of counterfeit garbage. We're another legitimate channel for U.S. consumers,' " he said.

 

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Cool Hacks to Combat Winter -- Savings Experiment

January 13, 2015, 3:30 am

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Filed under: Savings Experiment, Home & Garden

While we all have to deal with wet, snow-drenched shoes this season, did you know that you can dry them out quicker by stuffing them with newspaper to absorb the moisture? You might have to switch out the paper depending on the sogginess, but this really works. Here are some more great winter hacks to help you and your budget stay warm this season.

To tackle drafty doors, many retailers sell draft-blockers for about $15 dollars, but you can easily use pipe insulation instead. This item can be found at your local hardware store and does the same job at a fraction of the cost. For about $1.50 for a 6-foot tube, you'll have enough to cover two doors. Simply cut to length and then slide the insulation into the gap.

As for drafty windows, look no further than some bubble wrap for a cheap and easy fix. Measure and cut a piece to fit your window, mist the glass with water and press the bubble wrap against it. This will not only keep the cold air out, but also keep the heat in. It should stay on all season and still let light through.

Foggy car windshields can also be annoying in the winter. Regular commercial defoggers will cost you around $7 per bottle, but conventional shaving cream will work just as well. Simply put a dab on the inside of your windshield and then wipe with a clean cloth. This should keep it shiny and fog-free for a good while.

Lastly, you don't have to let the snow or ice stop you from riding your bike this winter. To add a little traction to your two-wheeler, place zip ties at even intervals around each tire. It's that simple.

Don't let the cold get you down this season. Give these easy winter hacks a try, and see the savings for yourself.

View Poll

 

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High Court Rules for Homeowners in Mortgage Dispute

January 13, 2015, 3:48 am

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Filed under: Mortgages, Banking, U.S. Government, Scandals and Lawsuits, Home Loans

By Lawrence Hurley

WASHINGTON -- The U.S. Supreme Court on Tuesday ruled in favor of homeowners seeking to back out of mortgages when lenders are accused of failing to follow a federal "truth in lending" law.

On a 9-0 vote, the court handed a win to an Eagan, Minnesota couple, Larry and Cheryle Jesinoski, over the $611,000 loan they obtained in 2007 from Countrywide Home Loans, now part of Bank of America (BAC).

On the technical question before the justices, the court said homeowners need only write a letter to the lender, as the Jesinoskis did, and don't need to file a lawsuit in order to benefit from a provision of a federal law known as the Truth in Lending Act.

The law allows consumers to rescind a mortgage for up to three years after it was made if the lender doesn't notify them of various details about the loan including finance charges and interest rates. The Jesinoskis filed their notice right before the end of the three-year period and filed a lawsuit a year later after the bank said it was disputing the claim.

The language of the law "leaves no doubt that rescission is effected when the borrower notifies the creditor of his intention to rescind," Justice Antonin Scalia wrote on behalf of the court.

The provision is typically used by homeowners who are struggling to pay their mortgages. Lawyers for consumers say mortgage companies routinely violated the law in the years prior to the 2008 financial crisis. Lenders contend that notice is not enough if the bank in question disputes the homeowners' claim.

Appeals courts had been split over what homeowners have to do to trigger this rescission process. The Jesinoskis appealed a lower-court decision that favored Countrywide. The Supreme Court reversed that lower-court ruling.

The case is Jesinoski v. Countrywide, U.S. Supreme Court, No. 13-684.

 

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Swiffer Sweeper Claims Beaten Back by Broom Company

January 13, 2015, 6:01 am

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Filed under: Consumer Ally, Consumer Goods, Consumer Issues, Consumer Protection, Products

Brags about the superiority of the Swiffer Sweeper to brooms went up in a puff of dust Tuesday. The claims should be halted, the advertising industry's self-regulatory body concluded, following a challenge lodged by a broom company.

The National Advertising Division, run by the Council of Better Business Bureaus, said it told Swiffer manufacturer Procter & Gamble (PG) that it should stop saying its product is superior to brooms.

The Dirt on the Claims

The Libman Co. argued that ads boasting that Swiffer Sweeper cleans floors "50 percent more" and "leaves floors up to three times cleaner" than brooms on "dirt, dust and hair" had no basis and that testing that had been done to support the claims weren't fair. Among the claims made in Swiffer ads:

• "Swiffer Sweeper leaves your floors up to three times cleaner than a broom" on dirt, dust and hair.
• "Dry cloths leave floors up to three times cleaner vs. broom on dirt, dust and hair."
• Swiffer Sweeper picks up "50 percent more dirt, dust and hair than with a broom."

While the advertiser argued the comparisons were specifically related to small debris -- like dust and hair --- the review determined the boasts conveyed a larger message: That Swiffer is superior to brooms.

"Following its review of the evidence in the record, NAD determined that the challenged claims, which appeared prominently in the challenged advertising and on product packaging, conveyed the unsupported message that the Swiffer Sweeper significantly outperforms all brooms on all household surfaces, a message that was not supported by the evidence in the record," it said.

Only Two Brooms Tested

And only two brooms were tested for the claims, the group said. "There was no evidence in the record that the two brooms represent or perform similarly to the vast majority of the brooms in the marketplace," according to the National Advertising Division. "Further, the advertiser tested only hardwood, vinyl and ceramic tile."

Even the amount of space used for the tests -- nine square feet -- was found troubling by the advertising panel, which concluded: "NAD found the advertiser's evidence to be materially flawed and recommended that P&G discontinue the challenged claims."

Procter & Gamble, in its response to the findings, said: "While disappointed by the recommendation, P&G is committed to self-review of advertising. The company will discontinue the challenged claims and will consider the NAD's recommendations in future advertising."

 

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Best Remodeling Projects to Boost Your Home's Value

January 13, 2015, 6:38 am

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Filed under: Spending

Watching real estate flipping TV shows can make the process seem messy but glamorous and profitable. According to a new annual report from Remodeling Magazine, a trade publication for builders, the romance of the entertainment industry is a far cry from the realities of construction and selling a house.

In fact, the smallest and cheapest fixes often can deliver the biggest return for your home. As for that $50,000 kitchen revamp? If you're not a gourmet chef, you might want to hold off.

The top remodeling project, in terms of percentage of the cost recouped, was replacing a steel entry door. The average cost of such a job was $1,230, adding additional resale value of $1,252, or 101.8 percent. From that point on, none of the 36 remodeling jobs analyzed paid for themselves. Here are some others that offset at least three-quarters of their cost:

• Adding a manufactured stone veneer (92.2 percent recovery on $7,150 cost).
• Replacing a garage door (88.4 percent recovery on $1,595 cost).
• Replacing fiber-cement siding (84.3 percent recovery on $14,014 cost).
• Replacing vinyl siding (80.7 percent recovery on $12,013 cost).
• Adding a wood deck (80.5 percent recovery on $10,048 cost).
• Minor kitchen remodel (79.3 percent on $19,226 cost).
• Wood window replacement (78.8 percent on $11,341 cost).
• Foam-backed vinyl siding replacement (77.6 percent on $15,184 cost).
• Converting an attic into a bedroom (77.2 percent on $51,696 cost).

Except for replacing the entry door, all the projects have a net cost to the owner after selling the property. That's on average, however. Some projects did considerably better in specific markets. The steel entry door replacement had a payoff ranging as high as 112 percent to 123 percent, depending on the geographic region. In the Pacific -- Alaska, Washington, Oregon, California and Hawaii -- garage door replacement, stone veneer addition, deck additions and minor kitchen remodels all more than paid for themselves. In San Francisco, all 36 projects had a payback of more than 100 percent, although how much of that is due to the continuing climb of real estate prices is hard to say.

As Not Seen on TV

So why do the payoffs on the TV remodeling shows always seem to top 100 percent? The reason is, as Remodeling puts it, the "laughingly low" costs of the projects because manufacturers often provide free product for promotional consideration. Unless your local building supplier is willing to similarly subsidize your efforts, chances are that you're not going to see your remodeling pay off, at least in home resale value.

Resale value should be only one reason to consider remodeling. If you need more space or are unhappy in the house as it is, changes might provide satisfaction, if not financial incentive. In some cases, there may be additional fiscal payoff if the change somehow lowers other costs of living, like adding insulation to reduce heating or air conditioning expenses.

If you do want to woo a homebuyer, focus on the projects that make the outside look better, one reason why front entry and garage door replacements or new siding can have a strong payback. Inside, try changing the tile on a sink backsplash or swapping out cabinet hardware. And for the cheapest high-impact project, clean the interior so people can see what is there.

 

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Ikea Recalls Crib Mattresses After Babies Are Trapped

January 13, 2015, 7:49 am

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Filed under: Consumer Ally, Recalls, Consumer Protection

Ikea is recalling about 169,000 crib mattresses after reports that two infants were trapped between the mattress and the end of their cribs, the U.S. Consumer Product Safety Commission said on Tuesday.

The Ikea mattresses were sold between August 2010 and May 2014 may violate federal regulations. The commission said the gap between the mattress and crib must be less that the width of two fingers. "If any gap is larger, customers should immediately stop using the recalled mattresses and return it to any IKEA store for an exchange or a full refund," the CPSC said.

No proof of purchase is necessary to return or exchange one of the crib mattresses, Ikea said.

The mattresses being recalled are the Ikea Vyssa sold under the model names Vackert, Vinka, Spelevink, Slöa and Slummer. The mattresses have a label showing the date of manufacture and "Vyssa." The recalled mattresses, which were made in Mexico, were sold only at Ikea stores and Ikea's website.

For more information, consumers can call Ikea at 888-966-4532 or visit Ikea's recall site.

 

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Market Wrap: Wall Street Ends Lower in Volatile Session

January 13, 2015, 8:55 am

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Filed under: Energy, Market News, Commodities & Futures, Materials & Construction, Stocks

By Caroline Valetkevitch

NEW YORK -- U.S. stocks ended down slightly in a volatile session Tuesday, led by a drop in materials and energy shares following further weakness in commodity prices.

The Standard & Poor's 500 index (^GPSC) slipped under its 50-day moving average of 2,046 around midday, triggering weakness, while volume also picked up. All three indexes fell from highs of more than 1 percent during the session, with the S&P 500 moving more than 48 points from its high for the day to its low, its widest range since Oct. 15.

Shares of homebuilders fell 1.5 percent after KB Home forecast a drop in gross margins for the first quarter. Homebuilder stocks had been up earlier in the session, but KB Home (KBH) dropped 16.3 percent to $13.87, its biggest percentage fall since 1992.

We're seeing commodity prices continue to go down, not only in oil but across the board.

Shares of Freeport McMoRan (FCX) slid 7.5 percent to $21.04, and were the S&P 500's biggest percentage decliner. The S&P materials index fell 1.2 percent and was the S&P 500's worst-performing sector.

Copper prices dropped further below $6,000 per tonne to their weakest level in more than five years, while oil prices tumbled to near six-year lows before recovering.

"We're seeing commodity prices continue to go down, not only in oil but across the board. So it's this fear of lower commodity prices leading to global deflation which is leading this nervousness," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.

The S&P energy index was down 0.7 percent, with shares of Exxon Mobil down 0.4 percent at $90.

Major Indexes End Lower

The Dow Jones industrial average (^DJI) fell 27.16 points, or 0.15 percent, to 17,613.68, the S&P 500 lost 5.23 points, or 0.26 percent, to 2,023.03 and the Nasdaq composite (^IXIC) dropped 3.21 points, or 0.07 percent, to 4,661.50.

The losses extended the recent decline to a third day. The S&P 500 is now down 3.2 percent since its Dec. 29 record high, marked by concerns about plunging oil prices, global economic weakness and Greece's potential exit from the eurozone.

A reduction in the amount to hedging in the market as shown by options on the CBOE Volatiity index suggests some investors may be more exposed to big fluctuations in the stock market, said Joe Bell, senior equity analyst at Schaeffer's Investment Research in Cincinnati. The VIX ended the day up 4.9 percent at 20.56.

Earnings Season

Results have begun rolling in for U.S. quarterly earnings, though estimates have fallen sharply in recent months as oil prices sold off.

Goodyear Tire & Rubber (GT) stumbled 7.1 percent to $26.05 after the company estimated full-year operating income growth "slightly below" its forecast of 10 to 15 percent.

About 7.8 billion shares changed hands on U.S. exchanges, above the 7.2 billion average for the last five sessions, according to BATS Global Markets.

NYSE decliners outnumbered advancers 1,627 to 1,460, for a 1.11-to-1 ratio; on the Nasdaq, 1,393 issues fell and 1,326 advanced, for a 1.05-to-1 ratio favoring decliners.

The S&P 500 posted 57 new 52-week highs and 21 new lows; the Nasdaq Composite recorded 113 new highs and 105 new lows.

What to watch Wednesday:

• At 8:30 a.m. Eastern time, the Commerce Department reports retail sales for December, and the Labor Department reports import and export prices for December.
• The Commerce Department releases business inventories for November at 10 a.m.
• The Federal Reserve releases its latest survey of regional economic conditions across the nation at 2 p.m.

These selected companies are scheduled to release quarterly financial results:

• JPMorgan Chase (JPM)
• Wells Fargo (WFC)

 

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Now You Can Get Your FICO Score for Just $1 -- With a Catch

January 13, 2015, 10:00 pm

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Filed under: Credit, Credit Reports, Credit Score

"The Fair Credit Reporting Act requires each of the nationwide credit reporting companies -- Equifax, Experian, and TransUnion -- to provide you with a free copy of your credit report, at your request, once every 12 months."
-- U.S. Federal Trade Commission

Identity theft and credit card fraud are plagues upon the nation: After the recent data thefts at Target (TGT), eBay (EBAY) and Sony (SNE), it's unlikely anyone would argue otherwise.

The good news, though, is that if you think you might be the victim of credit fraud, and want to check your credit report to confirm that no one's been, say, opening credit card accounts in your name, the federal government has given you a way to do that free of charge. Once a year, you can hit up each of the three major credit bureaus for a free copy of your report. It's best to space out your requests to hit each company separately, and you can get one free report every four months.

But what about the crown jewels of the credit reporting world? What if you don't just want copies of the raw data on your credit history, but also want a peek at your actual FICO credit score? That can be a problem. At least, unless you want to pay up for it.

Credit Scores? We Ain't Got (to Show You) Any Stinkin' Credit Scores

Equifax (EFX), Experian, and TransUnion spent a lot of time and money assembling your credit history. They spend more money hiring Fair Isaac (FICO) -- the company behind the FICO score -- to crunch the numbers and convert this raw data into an easy-to-use "credit score," which FICO provides each credit bureau in response to the data they send. FICO scores can differ among credit bureaus and differ over time, being generated by FICO in response to point-in-time requests for their generation from the respective bureaus. Also, not all "credit scores" are official FICO scores. According to Fair Isaac itself, when one of the credit bureaus sells you an official FICO score, it is called a "FICO Risk Score."

These companies make a lot of money selling this information -- both to companies that want to know if you're a good credit risk (TransUnion did more than $740 million in such business last year, according to S&P Capital IQ) and to consumers who are willing to pay to know their scores (Equifax's annual haul from its North America Personal Solutions business is $207 million). They're not going to give that kind of information away for free unless they have to. And so far, at least, the FTC isn't saying they have to.

Result: Historically, these companies have used credit scores as a marketing tool, bundling the price of a peek at your credit score with credit monitoring and identity theft protection services. For example, for $14.95 per month, Equifax will sign you up for constant monitoring of your official FICO score alone. For $15.95, they'll give you one-time access to your full credit report, plus an internally generated Equifax Credit Score (not the same as a FICO Risk Score -- see above). $19.95 a month will buy ongoing "premier" access to your Equifax Credit Score, credit report and ID theft monitoring. Like the super-size menu at McDonald's, you might have only wanted an order of fries, but Equifax hopes you'll pay a bit extra for a bigger bundle.

Pro tip: You can also get a one-time peek at your Equifax score while requesting your FTC-guaranteed once-a-year free credit report. In the signup process, Equifax will pitch you the option of adding your credit score for $7.95.)

The other two credit bureaus recently took a different tack. As of last month, both Experian and TransUnion have begun offering access to your credit score for just $1. TransUnion offers its internally generated TransUnion Credit Score, while Experian sells the official FICO score generated for it by Fair Isaac.

There is a string attached, of course. Both companies bundle the credit score peek with a "seven-day trial period" to their respective credit monitoring services. This seems like a better deal than, for example, the myFICO.com service from Fair Isaac, which locks you into a minimum three-month contract for credit monitoring (at $19.95 per month) if you want a peek at your FICO score. Note that myFICO will give you official FICO scores for all three credit bureaus.

Taking TransUnion or Experian up on their offer, however, does require vigilance on your part. Both companies will permit you to cancel your subscription within the seven-day free trial period, with no charges other than the initial $1. Forget to cancel, however, and Experian will begin billing you $21.95 monthly for Experian Credit Tracker, while TransUnion will sign you up for TransUnion Credit Monitoring at $17.95 per month.

The Upshot for Consumers

Now, there may well be value in these services. They may even be worth every penny. But savvy credit shoppers should also consider saving money with the following simple plan:

Step 1: Buy access to your official FICO credit score from Experian for $1. Since TransUnion and Experian charge the same $1, but only Experian provides an official FICO score, it appears to offer more value for the money. Cancel immediately after. Experian tells me via email that they'll permit you to repeat this trial offer twice a year.

Step 2: Take a good hard look at the credit report, too. It's free for the seven days, so why not?

Step 3: Keep up to date on changes in your credit report by staggering requests for your FTC-guaranteed credit reports throughout the year. For example, hit up Experian in January, TransUnion in May, and Equifax in September -- once a year, every year.

Step 4: In between times for those free official reports, use a free credit monitoring service such as CreditKarma.com or CreditSesame.com. Both services will also give you their best guesses at your probable credit score, and Credit Sesame will throw in $50,000 worth of "identity theft insurance and ID restoration help" -- also for free.

A strong believer in practicing what he preaches, Motley Fool contributor Rich Smith has requested his own Equifax credit report. As for stock disclosures, he has no position in any stocks mentioned. The Motley Fool, however, recommends and owns shares of eBay. Try any of our Foolish newsletter services free for 30 days. Want to make 2015 a winning investment year? Check out The Motley Fool's one great stock to buy for 2015 and beyond.​

 

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Save Thousands by Cutting These 10 Everyday Expenses

January 13, 2015, 10:00 pm

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Filed under: Saving

By Jennifer Calonia

The new year typically brings about many changes. People are more optimistic about fresh opportunities and are more motivated to leave bad habits behind. According to a GOBankingRates new year's resolution survey, Americans' No. 1 financial goal is saving money.

There are a number of ways to save money, but in the greater scheme of things, the fundamentals of saving money are simple: decrease your spending and increase your income (ideally at the same time). Re-evaluating your spending habits is the easier in many cases, but it can be hard to part with some habitual expenses. What you might not realize, however, is that most unnecessary expenses are misleading in their true costs. Cutting these 10 purchases from your budget will change the way you save money one day at a time, and put money back in your pocket over the course of the year.

1. Gourmet Coffee

Gourmet coffee shops like Starbucks (SBUX) can help give your workday a boost. A grande (16-ounce) brewed coffee costs about $2, which doesn't look like such a budget-blower with just one transaction. But routine pit stops at your favorite coffeehouse five days a week expose a financial sinkhole waiting to collapse. Cut them out, and you can save $10 a week, $520 a year (assuming you're still doing a weekday grande on vacation and holidays).

2. Specialty Cable Channels

Premium channels like HBO, Showtime and Starz help you keep up with your favorite programming, like "True Blood," "Dexter" and "Game of Thrones," but this kind of home entertainment also comes with a premium price tag. Depending on your cable provider and the premium channels added to your contract, the cost for just one channel can be as much as $18 per month. Add on the the required subscription for expanded basic cable, which the FCC states was an average of $64.41 in 2012, and the price paid for a night of television can cloud your eyes. You could save $82.41 a month (excluding taxes, fees and equipment charges), which is $988.92 a year.

​3. Cigarettes

While you might know that smoking cigarettes can lead to disastrous long-term health issues, it can also burn a hole through your budget. Smoking one pack of cigarettes a day at the cost of $6 per pack might appear to be affordable, but take a closer look at the numbers: $42 a week, $2,184 a year.

4. Lunch

In 2013, working Americans spent an average of $36.17 each week on lunch, according to a survey by Workonomix. Clearly, leaving the brown bag at home can lead to financial consequences that eat at your savings fund. Factoring in vacations, holidays and what you bring from home, let's say you could still save $1,300 a year by brown-bagging.

​5. Oil Changes

Some workers rely on their vehicles to get to work and earn a paycheck, which is why keeping your car maintained is important. Allocating time to perform routine oil changes, for example, can help the lifespan of your vehicle, but the labor costs involved can be steep. With a bill this high, you might as well learn how to make this a recurring DIY task. According to Edmunds, the majority of car manufacturers recommend having an oil change performed every 7,500 miles, but most quick-change oil companies, like Jiffy Lube, still tout the stone-age rule of thumb that an oil change is required every 3,000 miles. In its investigation, Edmunds representatives were charged $92.39 for a Mobil 1 oil change service. The U.S. Department of Transportation reports that, on average, drivers commute 13,476 miles per year, meaning that those who adhere to the 3,000-mile recommendation can look forward to nearly five service bills in one year. Buy the oil and filter, do the work yourself and cut it to just two changes a year, and you save about $325.

​6. Bottled Water

Keeping hydrated is a good habit to uphold in the new year, but there are ways to save money on the cost of water. Purchasing bottled water can cause a drought in your savings, with a 24-pack of Nestlé (NSRGY) bottled water $5.98 at Sam's Club (WMT). Drink from the tap and save $310.96 a year.

7. Dog Grooming

Dogs can be beloved members of your family, and like yourself and other loved ones, they have grooming needs to ensure they remain pest-free and healthy. Booking the services of a professional groomer might be most convenient, but will keep your savings goals in the dog house. Costs for full grooming services depend on the size of your pet and coat type, with rates as high as $70 for a medium-sized dog. An expense this steep justifies spending a little more one-on-one time grooming your pet -- and saving $840 a year.

8. Multivitamins

Despite there being no concrete consensus regarding whether daily multivitamins actually provide a health advantage, shoppers still buy into this expensive product. Drugstores sell a 100-count bottle of daily multivitamins for about $10, which works out to be $36.50 a year.

9. Salon Services

Maintaining your appearance is important and, in some professions, mandatory. However, scheduling a weekly touch-up appointment with your salon for a manicure and pedicure will cost you. An April survey by Centzy found that the average cost of a mani/pedi is $34.86, a luxury that quickly adds up -- to $1,812.72 -- if you have one every week.

10. Overdraft Fees

Median bank overdraft fees are about $30 per transgression, according to a GOBankingRates report. Keeping organized financial books can help you save $360 a year and get you on track with healthy financial habits for the long run.

 

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The Tax Guide to Buying, Owning Your Dream Home

January 13, 2015, 10:00 pm

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Filed under: Taxes

Home ownership is the American dream, and millions of people aspire to own their own home at some point. To make it easier for Americans to purchase and maintain their homes, federal tax laws include lucrative tax breaks that only homeowners can claim. In this guide, you'll learn about some of the tax credits, deductions and other benefits you can use to make home ownership more affordable.

The Big Tax Break When You Borrow

Nearly everyone has to take out a mortgage to help them buy a home. Although the interest on most loans that you take out for personal purposes aren't deductible on your tax return, tax laws make an exception for mortgage debt. You can take any interest you pay on up to $1 million you borrow to purchase your home and use it as an itemized deduction on your tax return. In addition, you can get an additional $100,000 in home equity indebtedness and deduct interest on that amount as well. You can also deduct at least a portion of any points you pay on your original mortgage, with a full deduction available in most cases for a home purchase that is your primary residence.

Itemizing mortgage interest can save you as much as 40 cents for every $1 in interest that you pay. The higher your tax bracket, the more valuable the deduction, and therefore the greater the incentive to borrow to buy a home. Conversely, for lower-income homeowners, the itemized deduction might be worth nothing at all if your total mortgage interest and other itemized deductions don't exceed your standard deduction. It's therefore important to look at your full tax picture to determine what value the mortgage-interest deduction has to you.

Getting Back Part of Your Property Taxes

Another deductible expense is property tax you pay for your home. State and local property taxes are eligible for you to itemize, with the deduction coming in when you actually pay your tax bill.

One thing to keep in mind with property taxes is that if you're subject to the Alternative Minimum Tax, you're not allowed to deduct property taxes against your AMT liability. That's not a problem for most homeowners, but many upper-middle-income households run into AMT issues and must take the limits on deducting property taxes into account when considering the tax consequences of homeownership.

Keep More of Your Gains

One of the biggest tax breaks homeowners get comes when it's time to sell. Ordinarily, selling property involves paying tax on capital gains. But homeowners get to exclude up to $250,000 for single filers or $500,000 for joint filers in capital gains when they sell.

To qualify, you have to have lived in the home for at least two of the five years before you sell, with pro-rated exclusions available for those who've spent less time in the property. Nevertheless, this provision can save you tens or even hundreds of thousands of dollars at tax time.

Get Extra Credit

In addition to basic homeowner expenses, some special purchases you make can qualify for tax credits. Specifically, the Residential Renewable Energy Credit gives you tax credits of up to 30 percent when you install energy-efficient upgrades such as solar-energy systems. Meanwhile, the similar Residential Energy Efficiency Credit offers up to $500 in credits against expenses for other improvements, such as adding insulation, replacing windows or doors, or buying more efficient heating and cooling equipment for your home. Although the Renewable Energy Credit is in effect through 2016, the Energy Efficiency Credit was only recently renewed through the end of 2014, with the potential to be renewed in 2015 and beyond.

Motley Fool contributor Dan Caplinger thinks homeownership is overrated, but that didn't stop him from buying a house. You can follow him on Twitter @DanCaplinger or on Google+. To read about our favorite high-yielding dividend stocks for any investor, check out our free report.

 

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5 Things to Do Now to Avoid Freaking Out Over Taxes in April

January 13, 2015, 10:00 pm

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Filed under: Taxes, Personal Finance, Income Tax, IRS, Tax Deductions

By Kathryn Tuggle

NEW YORK -- January is about halfway over, and that means tax day is a little more than three months away. If you want to avoid the first-week-in-April scramble, here's a look at the five things you should do now to prepare. With a little prep work, taxes won't be nearly as much of a headache as you think.

1. Start a folder or box for all documents, including paperwork for any deductions. "Most people have a lot of anxiety when it's time to start thinking about taxes, but it all boils down to one reason -- a lack of organization," says Ian Gillespie, creator of the iBank banking and budgeting app.

The simplest thing you can do in the New Year is to get out a file folder, write "Taxes 2014" on it, and start gathering your W2, any 1099s, your mortgage statement and more.

"You don't have to do anything with them besides getting them organized into one spot," he says.

When you wait until the last minute to do everything, you never know whether or not you're going to owe money.

With taxes, it all comes down to proper documentation, says Kay Bell, contributing tax editor for BankRate.com.

"Are you going to make claims for credits and deductions? Did you give things to charity? Are you going to get home-related tax breaks? You've got to be on the lookout for all the paperwork and start gathering receipts," Bell says. "If you deduct something but don't have the records, the IRS can automatically disallow that deduction."

Don't forget to gather information from your spouse, and from anyone you may claim as a dependent, including children or an older relative you may care for. You'll need their Social Security numbers and documentation on any expenses related to their care. For example, if you have a child in day care, make sure you have the child care facility's tax ID number, Bell says.

2. Keep an eye out for documents sent via the Postal Service and electronically. "If you have accounts that only send you communication electronically, make sure you print your tax documents, because you might not receive these in the mail," says Erin Ellis, personal finance expert at Philadelphia Federal Credit Union. "This might be the case for student loans, tuition expenses or any accounts where you do online banking."

Most people can expect to get at least some of their statements via email this year, Bell says.

"If you don't see anything, check your spam folder just in case," she cautions. "Double-check all your email accounts so when you go to complain that you didn't get it, you can be sure you didn't get it."

By law, issuers of tax documents have until the end of January to send out tax documents, Bell says. Since Jan. 31 falls on a Saturday this year, some documents may not make it to your door until Feb. 2.

"Most people are good about getting them to you before the deadline," Bell says. "If you left a job midyear, the company may have already sent you your W-2. Others may be in the mail now, as many companies close out payroll at the end of December and generate documents then."

If a company you worked for in 2014 has gone out of business, it may be more of a challenge to get your documentation in a timely manner.

"This is why it's important to start gathering your documents now. You've got a few months to chase down some things and make calls if you need to," she says.

3. Find last year's tax return. Always have last year's return handy, Ellis says.

"If you are preparing them yourself or going to a tax preparer, it can be helpful to use last year's as a reference," she says.

This is especially important for contract employees with more than one job or for people with multiple investments they may have sold or profited from in the last year.

"If you have investments you can see, 'Oh, I still own that stock,' or you may realize, 'Oh, I sold that one so I have to report the gains,' " Bell says. "If you're a contractor, you may have a recurring job every year that you forgot about."

Sometimes even seeing a job you no longer have on an old return can jog your memory about current sources of income, Bell stresses.

"You may look back and see, 'Well, this contract feel through, but I got another one to replace it,' " she says.

4. Start working on your taxes, even if you're using an accountant. If you're using your credit card statements to take an initial look at your 2014 expenses, now's the time to get them out and start circling relevant charges.

"You need to spend a few hours with it and say, 'OK, these were my business expenses, these were my charitable contributions,' and make sure everything looks OK," says Jason Steele, personal finance expert at CompareCards.com. "This process is the same whether you're using an accountant, filing yourself or using a software program. Even a skilled accountant won't be able to look at your statements and categorize your charges -- only you can do that."

When you inspect your documents early, you can easily head off any problems with missing forms or receipts, Gillespie says.

"That blank for 'charitable deductions' may jog your memory on something," he says. "You've still got enough time to hunt for something you put in a shoebox. But if you wait too long, you might miss out on some great deductions."

5. Think about next year, even if it's the last thing you want to do. Want to make a great New Year's resolution? Make tax season a year-round planning event, Gillespie suggests. Seriously.

"It's never too early to start thinking about next year. The reason so many people think of tax season as stressful is because of the all the unknowns. When you wait until the last minute to do everything, you never know whether or not you're going to owe money."

If you haven't already invested in financial management software, do so now, he recommends. You can use it for this year's taxes, and get a head start for next year.

"It really makes all the difference," he says.

 

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3 Successful Investing Habits of the Wealthiest 1%

January 13, 2015, 10:00 pm

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Filed under: Stock Picks, Stocks, Warren Buffett, Investing

By Donna Fuscaldo

In 2014, the wealthiest 1 percent of investors outperformed everyone else by nearly 40 percent, according to a study by SigFig, an investment management firm in San Francisco. It's only human to wonder why. Is there a secret performance-enhancing sauce to their investing strategy?

Not necessarily. In fact, Warren Buffett -- the ultimate 1-percenter, if you will -- is a known proponent of investing in index funds, believing that over the long term, this low-cost strategy outperforms those who pay high investing fees. We don't want to make too much of a single year's results; it's possible that the uber-wealthy (the top 1 percent of investors in this study synced $5 million or more) aren't better investors than everyone else; they could have gotten lucky.

Nonetheless, the top 1 percent may exhibit certain behaviors worth emulating. A 2013 Fidelity Millionaire Outlook study of Generation X/Y investors (those aged 48 or younger with investable assets of at least $1 million, excluding workplace retirement accounts) found they are highly involved in how their assets are invested. That doesn't mean they are on the phone with their adviser 10 times a day, but they do understand how the stock markets work and know the importance of creating a plan and sticking with it. Here are three investing habits that could benefit anyone.

1. Keep Emotions in Check

Human emotions are hard to control -- and that's particularly true when it comes to money. Panic can easily set in and is often the reason investors buy high and sell low. "People tolerate risk very well when the markets are popping up but when they are going down, risk suddenly becomes the enemy," says Taylor Gang, principal wealth manager at Evensky & Katz / Foldes Financial Wealth Management, which manages about $1.6 billion in assets for clients with assets anywhere from $1 million to $10 million. "The key is to prevent this human emotion from taking over and that's where many 1 percenters succeed."

Moving in and out of stocks to chase the market's ups and downs may seem like a smart plan, but in the long run, being disciplined wins the race. In 2014, the median 1-percenter had portfolio turnover of 10 percent -- while everyone else churned their portfolio 13 percent.

2. Invest with Taxes in Consideration

Nobody likes to pay taxes, yet many investors ignore the tax ramifications of their investing decisions. That could turn out quite expensive for those in the top tax bracket. "When you are looking at a 35 percent capital gains tax, when the average person has 10 percent to 15 percent, you have to become tax savvy," says Kimberly Foss, founder of Empyrion Wealth Management, who manages money for individuals with $3 million or more in investable assets.

Because of that, many high-net-worth investors employ tax-advantaged strategies that help their performance and keep their tax rate in check. Consider this: the 1 percent are five times more likely to own Vanguard's Intermediate-Term Tax-Exempt Fund (VWIUX) than the 99 percent.

3. Don't Time the Market or Be Swept Up by Hype

"Successful investors are often skeptical," says Gang. "They do the appropriate amount of due diligence and they investigate and make decisions with the benefit of information." Consider this: Alibaba (BABA), the Chinese e-commerce company, was the hottest IPO of 2014, yet the top 1 percent were only half as likely to own that stock at the end of 2014 as the rest of us. An IPO may seem attractive -- after all, you are getting in on a company poised for growth -- but often that's already priced into the shares and the ones who will benefit are those who held a piece of the company when it was private.

"An IPO is not a great panacea," says Jeremy Kisner, senior wealth adviser at Surevest Wealth Management, who manages investors with $1 million to $10 million in assets. "It's a panacea for the people who held the stock when it was private."

The 1 percent are also half as likely as the 99 percent to own Facebook (FB), Apple (AAPL), Twitter (TWTR) and Ford (F), and only a third as likely as the 99 percent to own Tesla (TSLA): stocks that otherwise top the popularity charts among everyday investors. So what are they most likely to own? It comes as no surprise, perhaps, that on top of that list is Warren Buffett's Berkshire Hathaway Class A shares (BRK-A), which traded at $224,675 at close on Jan. 8.

There is No Secret Sauce

Of course, being wealthy doesn't make one immune to bad investing decisions at all. In this study, for example, the top 1 percent are just as likely to be overly exposed to equities vs. bonds relative to their risk profile (according to SigFig's data and risk assessment questionnaire). And they pay on average 17 percent more in fees as a percentage of assets, translating to $8,000 a year in investing costs that are often easily avoidable.

As Buffett wrote in his 2013 letter to shareholders, "The goal of the non-professional [investor] should not be to pick winners -- neither he nor his 'helpers' can do that -- but should rather be to own a cross-section of businesses that in aggregate are bound to do well."

Donna Fuscaldo is a contributing writer at SigFig. Nearly a million people use SigFig to track, improve and manage over $300 billion in investments.

 

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JPMorgan Reports $4.9 Billion Profit, Hit by Legal Costs

January 13, 2015, 11:44 pm

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Filed under: Company News, JP Morgan Chase, Earnings, Banks, Scandals and Lawsuits

By KEN SWEET

NEW YORK -- JPMorgan Chase (JPM) reported a 7 percent drop in fourth-quarter earnings Wednesday, hit by more legal costs and a drop in trading revenue.

JPMorgan, the biggest U.S. bank by assets, said it earned $4.93 billion, or $1.19 a share, for the three-month period ending in December. That compares with a profit of $5.28 billion, or $1.30 a share, a year ago.

JPMorgan's results were hit by a $990 million charge after taxes for legal expenses, more than analysts expected. The bank's results have been impacted by various legal costs over the last several quarters as it has settled lawsuits with state and federal regulators over its role in the housing bubble and subsequent financial crisis.

Total revenue fell 3 percent to $22.5 billion from $23.2 billion a year ago.

JPMorgan's investment banking division was hit by the sale of its commodities trading division and a slowdown in bond trading, one of the bank's larger businesses. Fixed-income revenue fell 23 percent from the prior year to $2.5 billion.

In the bank's commercial banking division, which includes credit cards, checking accounts, mortgages, and auto loans, there are signs that consumers are more willing to take on debt and are spending more.

Credit card balances were up 3 percent to $131 billion, while merchant processing volume, the amount of money being spent on the bank's credit and debit cards, was up 13 percent from a year ago. The bank processed 10.3 billion transactions in the quarter, up 7 percent from a year ago.

The bank also had an 8 percent increase from the prior year in auto loan originations.

The results missed Wall Street expectations. The average estimate of analysts surveyed by FactSet was for earnings of $1.31 a share.

JPMorgan shares fell 1.4 percent in pre-market trading to $58.

 

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Retail Sales Post Largest Decline in 11 Months in December

January 14, 2015, 12:36 am

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Filed under: Retail, Holiday Shopping, Economic Indicators, GDP, This Built America

By Lucia Mutikani

WASHINGTON -- U.S. retail sales recorded their largest decline in 11 months in December as demand fell almost across the board, tempering expectations for a sharp acceleration in consumer spending in the fourth quarter.

The retail sales fell 0.9 percent last month after a 0.4 percent increase in November.

It was the biggest decline since last January and exceeded economists' expectations for only a 0.1 percent drop and implied a slower pace of consumer spending at the end of 2014.

This isn't the start of a collapse in activity as that doesn't fit with the strength of employment growth and consumer confidence.

Still, economists saw the decline as temporary, citing a strengthening labor market and lower gasoline prices.

"This isn't the start of a collapse in activity as that doesn't fit with the strength of employment growth and consumer confidence. Retail sales will strengthen again before too long," said Paul Diggle, an economist at Capital Economics in London.

Economists at BNP Paribas in New York blamed the decline on difficulties adjusting the numbers for seasonal fluctuations in December because of volatility in holiday spending.

Other economists said consumers were saving the extra income from lower gasoline prices.

Excluding automobiles, gasoline, building materials and food services, sales fell 0.4 percent last month after a 0.6 percent rise in November.

Economists had expected the so-called core retail sales, which correspond most closely with the consumer spending component of gross domestic product, to rise 0.4 percent last month. Consumer spending accounts for more than two-thirds of U.S. economic activity.

Growth Estimates Cut

December's surprise decline prompted economists to lower their estimates for consumer spending in the final three months of 2014 as well as growth forecasts for the quarter, which had been sharply raised following last week's reports showing a smaller November trade deficit and larger wholesale inventories.

A second report from the Commerce Department showed retail inventories excluding automobiles barely rose in November.

December's weak retail sales saw traders cut bets on an anticipated June interest rate increase from the Federal Reserve.

The data combined with concern over the global economy to push U.S. stocks down. Prices for U.S. government debt rose, while the dollar fell against a basket of currencies.

Retail sales were weighed down by declines in receipts at electronic and appliance, clothing, building materials and garden equipment stores, as well as auto dealerships.

Online sales also fell as did receipts at sporting goods stores. Lower gasoline prices weighed on service station sales, with receipts falling 6.5 percent -- the biggest decline since December 2008.

Receipts at furniture stores and restaurants and bars rose.

In a separate report, the Labor Department said import prices fell 2.5 percent last month as the cost of energy plummeted. It was the largest decline since December 2008 and followed a 1.8 percent drop in November.

The weak import prices pointed to subdued inflation pressures over the coming months.

 

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Puss in Boots Enlisted to Rescue DreamWorks Animation

January 14, 2015, 1:00 am

≫ Next: Signs of Optimism Among Family-Owned Businesses

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Filed under: Company News, Netflix, Mergers & Acquisitions, Entertainment Industry, Investing

DreamWorks Animation (DWA) walked away with a Golden Globe award on Sunday night, taking top honors in the feature animation category with "How to Train Your Dragon 2." Now it's hoping that a new TV show will help train Wall Street.

As one of last year's worst-performing stocks -- shares of the computer-animation studio plummeted 37 percent in 2014 -- DreamWorks Animation has a lot of ground to make up in 2015. Sunday night's award is a good start. The critical acclaim should help prop up sales of the winning movie that became available as a rental and on DVD two months ago. The outlook for "How to Train Your Dragon 3" also got a nice boost. That movie is slated to hit theaters with a springtime 2017 release.

Now investors hoping for the stock to bounce back in 2015 should be turning their attention to the leading online streaming subscription service. A new series with a familiar Zorro-like Spaniard feline is taking to the digital airwaves, and it couldn't come at a better time for DreamWorks Animation.

Boots Strap

"The Adventures of Puss in Boots" -- a new animated series based on the sword-swinging cat from the Shrek movies -- debuts exclusively through Netflix (NFLX) on Friday. It's the latest entry in a deal for original content that DreamWorks Animation and Netflix inked two years ago.

The partnership between Netflix and DreamWorks didn't initially generate a lot of attention. It didn't help that the first series produced under the partnership was 2013's "Turbo FAST," an animated show based on the characters from the film about a snail bestowed with powerful speed that had bombed earlier that summer.

Things got a little more promising last month when "All Hail King Julien" hit Netflix. That series is based on the jovial lemur from DreamWorks' "Madagascar" franchise. However, since Shrek is the most successful movie franchise out of the computer-animation studio -- "Shrek 2" continues to hold the record for the highest-grossing computer-animated film of all time in the U.S. -- it wouldn't be a surprise if Friday's show is popular with young families who are Netflix subscribers.

Binge Viewers Need Not Apply

Netflix has taken an interesting stance with how it's distributing its kid-friendly shows. It may have historically offered up entire seasons of original shows on debut dates, but the video buffet provider is setting initial limits on binge viewing for the new animated shows.

Just the first five of the 22-minute episodes will be available on Friday. More episodes will be added along the way. It's a strategy that Netflix also used with "Turbo FAST" in 2013 and "All Hail King Julien" in 2014. Whether it's a matter of kids not engaging in binge-viewing marathons like their parents or Netflix wanting to give animation studios more time to create content, it's an interesting distinction in the way that Netflix is doing business with DreamWorks.

Investors won't care if the arrangement turns out to be mutually beneficial. It's easy to see how the series could inject new interest in the classic Shrek franchise, making this a winning deal for DreamWorks. However, it could also make Netflix more attractive to kids and young families. That's obviously something that Netflix wouldn't mind happening after falling short of its subscriber goals late last year.

Friday's show should be a boost for DreamWorks Animation, but don't be surprised if it's an even more magnetic move for Netflix.

Motley Fool contributor Rick Munarriz owns shares of Netflix. The Motley Fool recommends DreamWorks Animation and Netflix. The Motley Fool owns shares of Netflix. Try any of our Foolish newsletter services free for 30 days. To read about our favorite high-yielding dividend stocks for any investor, check out our free report.

 

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