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DailyFinance.com

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    Governors Meeting
    Steve Helber/APSecretary of Health and Human Services Sylvia Burwell
    WASHINGTON -- The Obama administration says it's getting harder to sign up those remaining uninsured under the president's health care law.

    Health and Human Services Secretary Sylvia Burwell on Tuesday has given three reasons why the 2016 sign-up season will be a bigger challenge: The most eager customers have already signed up; many of the remaining uninsured are young adults who may not see the value of coverage and those who remain are juggling tight household budgets.

    Burwell says an estimated 10.5 million Americans who remain uninsured are eligible for subsidized private health insurance through HealthCare.gov and state-run insurance markets.

    Open enrollment starts Nov. 1. The administration is focusing on five major metro areas: Dallas, Houston, Northern New Jersey, Chicago and Miami.

    The law already has driven down the uninsured rate.

     

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    Don't Be Fooled by Sneaky Retail Tactics
    After years of research, retailers have invented many tricks of the trade to get as much of your money as possible. Here are a few ways you can hang on to your savings without getting duped.

    First, while you're shopping, don't always follow your nose. Many retailers actually spray pleasant fragrances that are engineered to make you buy more. As it turns out, the smell of leather and cedar convinces us to buy luxury furniture, while citrus encourages us to browse longer and spend more. Instead, shop on a full stomach. This will serve as a barrier between your wallet and your nose.

    Next, take a closer look at sales, because some deals aren't always steals. At the supermarket, for instance, you may see a sign that says "10 boxes of pasta for $10," but what many consumers don't realize is that this is just another way of advertising 1 box for $1, and that they don't have to buy all ten boxes to qualify.

    Finally, if you've ever gotten lost in a store and couldn't find your way out, that might not be an accident. Retailers will re-arrange store layouts and intentionally locate crucial things like changing rooms towards the back of the shop. This way, you'll spend more time in the store, looking at items you didn't plan to shop for. Next time, just get in, get what you need and get out. If you can't find what you're looking for, ask an associate.

    When you go to the store, remember these tips. You'll find that you can outsmart the retailers, and spend wisely, too.

    View Poll

     

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    Stocks Close Down Day After Federal Reserve Leaves interest Rate Unchanged
    Spencer Platt/Getty Images
    By Caroline Valetkevitch

    NEW YORK -- U.S. stocks fell Tuesday as a sell-off in commodities dragged down materials shares and Volkswagen suppliers' shares dropped following the German carmaker's emissions scandal.

    S&P materials, down 1.8 percent, led the decline for the S&P 500, but the sell-off was broad-based, with all 10 major sectors lower.

    More worries about slower growth in China pushed commodities to two-week lows, with copper prices and industrial metals leading losses. U.S. crude oil also settled lower.

    Shares of Volkswagen suppliers BorgWarner, Honeywell and Delphi Automotive fell after the German carmaker admitted cheating on vehicle emission tests. BorgWarner (BWA) shares were down 7.6 percent at $39.37, while Honeywell (HON) fell 1.7 percent to $96.04 and Delphi (DLPH) lost 3.6 percent to $74.44.

    Biotech stocks fell for a second day after Democratic presidential candidate Hillary Clinton said she would propose a $250 monthly cap on prescription drugs. The Nasdaq Biotech Index was down 1.7 percent.

    "It's China. It's the Fed. It's slowing global growth. The news on Volkswagen is overhanging the auto industry. There is a bit of a bubble in the health care area," said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.

    The Dow Jones industrial average (^DJI) fell 179.72 points, or 1.1 percent, to 16,330.47, the Standard & Poor's 500 index (^GSPC) lost 24.23 points, or 1.2 percent, to 1,942.74 and the Nasdaq composite (^IXIC) dropped 72.23 points, or 1.5 percent, to 4,756.72.

    Volatile Market

    The Fed's decision last week to keep rates near zero has left investors guessing when the central bank will make its big move, increasing volatility in the market.

    Atlanta Fed President Dennis Lockhart said Monday a rate hike later this year was still possible. Lockhart is scheduled to speak again later Tuesday. Fed Chair Janet Yellen speaks Thursday.

    The CBOE Volatility index, Wall Street's fear gauge, jumped 11.4 percent to 22.44, above its long-term average of 20.

    Goldman Sachs (GS) fell 1.9 percent to $179.83 and was the biggest drag on the Dow after Chief Executive Officer Lloyd Blankfein said he had a "highly curable" form of lymphoma.

    Declining issues outnumbered advancing ones on the NYSE by 2,442 to 623, for a 3.92-to-1 ratio on the downside; on the Nasdaq, 2,171 issues fell and 636 advanced for a 3.41-to-1 ratio favoring decliners.

    The S&P 500 posted one new 52-week high and 35 lows; the Nasdaq recorded 16 new highs and 118 lows. About 7.3 billion shares changed hands on U.S. exchanges, below the roughly 8.3 billion daily average for the past 20 trading days, according to Thomson Reuters data.

    -Tanya Agrawal contributed reporting from Bangalore.

     

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    business man with money
    Getty Images
    By Mikey Rox

    When it comes to managing your money, there's a piece of the puzzle that some don't consider: If you're determined to improve your personal finances, you can start by boosting your level of confidence. You might be thinking one has nothing to do with the other, but low confidence can stand in the way of financial success.

    Here's how boosting your confidence can also boost your pocketbook.

    1. You're Not Afraid to Ask for What You Want

    About 10 years ago, I had a friend who had recently graduated college and found his first "real job." He became frustrated with the pay after only six months and felt he deserved more because he finished college with a high GPA and had prior experience through internships. He told me that he was going to walk into his employer's office Monday morning and ask for a $15,000 a year raise -- "negotiable, of course" (which got the side-eye from me) -- but wouldn't take anything less than $10,000.

    We looked at him like he was crazy. He was only 24 years old and fresh out of college. We told the dummy to slow his roll -- because that's what friends do. Let me rephrase that -- that's what negative, house-poor friends do.

    He didn't listen to us, and that's a good thing, because he got exactly what he wanted -- a higher salary and a better position. I don't remember what he said to his boss, but I learned a valuable lesson that day: Don't be afraid to go after what you want, and don't listen to naysayers. If he had listened to us, who knows how long it would've taken him to move up in the company.

    The point: Lack of confidence can cause you to doubt your abilities. And when there's doubt, you might miss opportunities that can result in a higher salary. A confident person, on the other hand, believes in himself. He's not afraid to ask for what he wants and deserves. From a financial standpoint, confidence gives you the strength to negotiate your salary and get paid your worth.

    Just imagine what you could do with an increase in income. You could stop living paycheck-to-paycheck, open a retirement account, or finally put a dent in your credit card debt. And you'd also pick up the tab for your idiot, low-paid friends the next time you go out. That goes without saying, of course.

    2. You'll Appear More Competent to Employers

    Even if you don't ask your employer for more money, she might notice your confidence and feel you're the right fit for a challenging position when she's ready to offer promotions.

    Employers don't only look for people who have a particular skill set or level of experience. They also assess an employee's boldness, poise, and assertiveness. Being confident can get you to the top faster than someone who's unsure or second-guesses himself. This is especially true for women, who tend to demonstrate less confidence in the workplace, suggest Katty Kay and Claire Shipman, authors of "The Confidence Code."

    If your employer thinks you lack confidence, he might unfairly conclude that you're not ready for certain responsibilities. And when you're constantly passed over for promotions, you might stay stuck at the same pay grade living paycheck-to-paycheck for much longer than you'd like.

    3. You Don't Have Anything to Prove

    It's sad, but some people will risk serious debt just to prove they can maintain the same lifestyle as their friends. I understand not wanting to be left behind when your friends eat at nice restaurants or take exotic vacations together. But under no circumstances should you get into major debt or end up flat broke from supporting a lifestyle you can't afford.

    It all goes back to confidence. A confident person isn't going to sacrifice their financial wellbeing so they can rub elbows or kick it with the Joneses. They don't get in over their heads financing expensive cars or houses, and they certainly don't rack up credit card debt to give the appearance that they're doing better than they actually are.

    Confident people know that financial success isn't about material possessions, but rather how well they manage their money. Someone can earn a lot and be broke, whereas someone who earns far less can have a bigger bank account. When you're a confident person and have absolutely nothing to prove, you're more apt to keep your personal expenses low and enjoy more disposable income. Thus it becomes easier to save a three to six-month cash cushion, and you're able to reach other financial goals, such as paying off credit card debt, saving for a kid's education, or making home improvements that can boost your property value.

    Life is better -- and cheaper -- when you're not trying to be someone you're not.

    Are there other ways you think confidence can improve your finances? Let us know in the comments below.

     

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    closeup portrait of attractive...
    Shutterstock
    By Ashley Redmond

    Even those who have committed to a budget find the process difficult. One in 5 Americans say their biggest financial challenge is sticking to a budget, according to GOBankingRates 2015 Life + Money Survey.

    But budgeting doesn't have to be scary. There are numerous ways to make a friendly budget that caters to your individual needs.

    And the payoff is worth the effort. The Life + Money Survey found that one in five Americans named always living paycheck-to-paycheck as their biggest financial fear. Budgeting can give you the financial discipline to save enough money to keep such fears at bay.

    Following are 10 ways to take the fear out of creating a monthly budget.

    1. Visualize Yourself Reaching the Goal

    Close your eyes. Picture yourself walking around and smiling because all of your debt is paid off. Your credit card is in your wallet and it has a zero balance. You know how much money is in your checking account, and you even have some money in your savings account.

    How amazing does that feel? Jim Afremow, a sports psychology specialist for Arizona State University, calls this technique "visualize to actualize."

    Visualizing helps turn your ideal image into reality. Use this technique as motivation to propel you toward your financial goal.

    2. Set Small Financial Goals

    By making financial goals smaller, they automatically become more attainable. For example, a small goal could be starting an emergency fund, paying down your credit card or saving for a down payment.

    In fact, according to Forbes, research has shown that setting overly ambitious goals is a surefire way of not doing what you set out to do.

    Keep in mind that financial goals vary by generation. For example, GOBankingRates Life + Money Survey found that older millennials (ages 25 to 34) are more concerned with saving for a home than any other age group.

    3. Share Your Financial Journey on Social Media

    Announce your financial goals on social media, whether it's via Twitter, Facebook or YouTube. Let the world know your budgeting plans and show them your progress.

    This will help keep you accountable. Paula Pant writes in U.S. News & World Report's The Frugal Shopper blog that public accountability is a great tool for keeping you on your game. Plus, it doesn't seem like bragging if you share both the frustrations and the victories.

    You may even want to consider starting your own blog. This may be beneficial because there's a strong community of supportive bloggers focused on budgeting.

    4. Track Your Spending

    If you are new to budgeting, start by tracking your spending, said Brittney Castro, founder and CEO of Financially Wise Women.

    "You need to track your income and expenses to get a solid idea of where you are spending your money," she said. "Try tracking this for a three-month period because some months are anomalies and you just need the average."

    When tracking, focus on two main areas: How much money is coming into the household every month, and how much is going out.

    At GetRichSlowly, Holly Johnson stresses the importance of being honest with yourself. If you are shocked by some results, try and remember that the goal is to improve your financial life. Embrace it.

    5. Use 50/20/30

    Once you have tracked your expenses, Castro says you should see how they measure up to a 50/20/30 guideline. She says your spending should be divided up as follows:
    • Fixed expenses (mortgage, rent, insurance): 50 percent
    • Fun (dining out, Jay-Z concert -- anything you want): 30 percent
    • Financial obligations (extra debt payment, emergency cash and retirement): 20 percent
    "When comparing your expenses against the 50/20/30 ask yourself, 'Where do I fall?' And, 'Where should I focus my attention?'" said Castro.

    6. Get the Whole Family Involved

    Teach everybody in the family the basics about savings and living within their means.

    "You may not necessarily want them involved in all conversations, but it's important to give them the broad scope of the family household budget," said Castro.

    7. Download Budgeting Apps

    Castro said most of the available budgeting apps are pretty good.

    "You just have to find one that works for you and stick with it," she said.

    Examples of budgeting apps include:
    • Pageonce Money and Bills
    • Mint.com
    • Expensify
    • BlackGold
    Castro urges you to remember that downloading an app is the beginning of the process, not the end.

    "Just because you download the app doesn't mean you'll stick to your budget," she says.

    Whatever app you choose, make sure you follow the budget that you implement.

    8. Make a Money Date

    A money date is a predetermined time when you review your budget. Castro suggests making a habit of a weekly one-hour review.

    "Most people say I will do my budget tomorrow or maybe next week, but if you set a weekly money date it becomes more bite-sized," said Castro.

    9. Get Familiar With Free Activities

    Remember when you were little and the best activities were free? Well, going to the beach or hanging out in a park all day still doesn't cost you.

    Google free activities in your city or town. A quick Web search may yield some surprising results.

    One example: The Art Institute of Chicago is free for Illinois residents Thursday evenings from 5-8 p.m. And kids under 14 always get in free.

    Figure out what activities are free in your city and mark down those that interest you, or your family and friends.

    10. Accept That Failure is OK

    Sometimes, you have to be bad at something before you get better at it. You may not hit your budgeting goals the first time around.

    Failure can be merely a step in the process of creating success.

    Turn your failure into improvement. Think of the places where you mess up on your budget as signs pointing to opportunities to improve.

    This story, 10 Ways to Take the Fear Out of Budgeting, originally appeared on GOBankingRates.com.

     

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  • 09/22/15--22:00: Mutual Funds Fit for a Pope
  • Filed under: , , ,

    Cuba Pope
    Tony Gentile/Pool via AP
    By Nellie S. Huang

    It's safe to say that Pope Francis isn't worried about making money in the stock market. Not only does he live modestly, he also chose to be named after St. Francis of Assisi, who spurned the good life (he was the son of a rich merchant) to be an itinerant friar in Italy.

    And that's just as well because if the Pope wanted to make money, and he wanted to do so by investing in funds that follow the principles of the church, his options would be decidedly mediocre. Four firms, in fact, offer mutual funds that hew to Catholic values. The newest entrant to this Catholic subgroup of morally responsible-investment funds is SEI. But those funds, which launched in late April, are available only if you invest through an adviser.

    The other fund firms -- Ave Maria, Epiphany FFV and Luther King Capital Management Aquinas, sponsor of the LKCM funds -- offer a total of 11 funds, and anyone can invest in them. The problem: The records of most of these funds are ho-hum. Ave Maria is the biggest, with five funds (three U.S. stock funds, one foreign-stock fund and one bond fund) totaling $1.6 billion in assets. The funds follow screening criteria that are set by a seven-member advisory board, whose members include Larry Kudlow, of CNBC's "The Kudlow Report," Domino's founder Thomas Monaghan and conservative activist Phyllis Schlafly. Among other things, the funds bar investment in companies that are involved in abortion or pornography.

    Ave Maria Rising Dividend (AVEDX) is the firm's biggest fund, with $770 million in assets. The fund favors firms with above-average earnings and dividend growth and a history of dividend increases. It holds just 45 stocks, and only three are health-care related: drug firm Abbott Laboratories (ABT) and medical device-makers Medtronic (MDT) and St. Jude Medical (STJ). The three represent 9 percent of the fund's assets, compared with health care's 16 percent weighting in Standard & Poor's 500 stock index (^GSPC).

    Rising Dividend weathered 2008 well, losing 23 percent while the S&P 500 plummeted 37 percent. That's one reason the fund's 10-year annualized return of 8.2 percent outpaces the S&P 500 by an average of 1.1 percentage point per year. But the fund's performance has been only so-so since (that same low exposure to health-care stocks is one reason). Over the past seven calendar years (including so far in 2015), Rising Dividend has lagged the typical fund in its category (funds that focus on large-company stocks with a blend of growth and value characteristics) in four years. Over the same period, the fund trailed its peer group by an average of 1.1 percentage point a year. (Unless otherwise indicated, returns are through Sept. 17.)

    Epiphany FFV (for Faith and Family Values) offers three funds: Epiphany FFV Strategic Income (EPIAX), an intermediate-term bond fund; Epiphany FFV (EPVNX), a large-company U.S. stock fund; and Epiphany FFV Latin America (ELAAX), which, not surprisingly, invests in Latin American stocks. All three normally charge a 5 percent load, but you can buy Epiphany FFV at Fidelity and Schwab with no transaction fee and no load.

    All of the funds invest in companies that pass the FFV scorecard test, which is a set of criteria based on the investment guidelines set by the U.S. Conference of Catholic Bishops. Unfortunately, none of the Epiphany funds is a winner. For starters, the funds charge above-average fees, with annual expenses of 1.25 percent for the bond fund, 1.5 percent for the U.S. stock fund and 1.75 percent for the Latin America fund.

    The Latin America fund is the best performer of the trio on a relative basis, but that's not saying much. This fund, which was launched in March 2012, has posted an annualized loss of 11.5 percent since inception. Pretty dismal, but it's better than the typical Latin America fund's 15.4 percent annualized loss over that period.

    LKCM Aquinas funds follow the U.S. Conference of Catholic Bishops investment guidelines, too. But like the Epiphany funds, the Aquinas funds also come with above-average annual fees. And their performance in recent years has been poor, relative to their peers.

    LKCM Aquinas Growth (AQEGX) and LKCM Aquinas Value (AQEIX), both large-company stock funds, have three-year annualized returns of 8 and 10.01 percent, respectively, placing them behind 99 and 84 percent of their peer groups. LKCM Aquinas Small Cap (AQBLX) doesn't fare much better; its three-year annualized return of 7.3 percent ranks among the bottom 96 in the category of funds that invest in small, growing companies.

    If your sole objective is to base your investments on Catholic principles, then consider some of the funds mentioned above, in particular Ave Maria Rising Dividend. But if performance and fees take precedence over faith when it comes to your portfolio, check out the Kip 25, a list of our favorite no-load mutual funds.

     

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    Staying informed online
    Getty Images
    By Tom Sightings

    Last week the entire financial world was on tenterhooks, wondering whether or not Janet Yellen and the Federal Reserve would dare to raise interest rates -- which are now at virtually zero percent -- by a quarter of a point. I turns out, they didn't. Interest rates are still at zero.

    For most of the last decade -- ever since 2007 -- the U.S. government, courtesy of the Federal Reserve, has been looking at interest rates through the wrong end of a telescope, watching them get smaller and smaller until they have all but disappeared. The result: Americans who are retired, and trying to supplement their Social Security benefits with some income from their savings, have been forced to take a huge pay cut.

    Interest rates for American savers are so low, they're even below our current low inflation rate. According to the U.S. Bureau of Labor Statistics, inflation for 2015 is running about 1 percent, depending on what measure you use. (Inflation in energy is actually negative, but for health care it's over 2 percent.) If you want to keep your money safe and secure, and invest in a two-year U.S. Treasury bill, you will get paid less than 1 percent. So you're actually losing purchasing power. If you go to the bank to buy a certificate of deposit, or if you keep your savings in a money market mutual fund, you'll get virtually nothing. The going rate is less than a tenth of a percent.

    A little arithmetic will illustrate the point. If you've done a good job of saving money over the course of your career and you have $1 million in the bank, you will receive about $500 or $600 a month from a five-year CD. That's pretty paltry for a millionaire, and doesn't go very far in paying your bills. Plus, the $500 or $600 is subject to federal and state income taxes. So, you will likely get even less than that.

    The artificially low interest rates are especially punishing for retired people trying to supplement their income with interest from a bank or a bond fund. It also hurts seniors who might want to buy an annuity or get a reverse mortgage. One result is that senior citizens are deprived of income they need to live. Another result is many retirees have reached for more income by purchasing corporate bonds or dividend paying stocks. This strategy has worked, so far. But it exposes our elderly to the gyrations of the stock market, at a time in life when they can least afford to suffer a financial loss.

    Over 40 million retired people live on Social Security. Many, like me, rely on interest from their savings to supplement their standard of living. But over the past few years that income has been squeezed down to almost nothing.

    But it's not just seniors. Low interest rates punish anyone who is saving for the future. Trying to save money to build up equity to buy a house, send your child to college or prepare for retirement is a fool's game. The more you save, the more you lose.

    Of course, the low interest rate policy is a good deal for the federal government, which is borrowing money. It's also been a big help to the real estate industry and the auto industry, as well as banks and financial institutions. The artificially low interest rates have also helped people applying for a mortgage or a car loan -- although it doesn't help, as many young people have discovered, if you can't qualify for the loan. But for the 60-plus crowd, it's meant nothing but financial distress.

    So, perhaps the Fed has been helping out corporate America long enough. Maybe it's time to help out retirees for a change. How about raising interest rates so we can earn a little bit of income from our retirement savings? A lot of retired folks, if they got a little better yield on their CDs, would go right out and spend that money. I think they'd do a better job than the banks in stimulating the economy. Don't you?

    Tom Sightings blogs at Sightings at 60.

     

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    LAX Expected To Be Busiest US Airport During Thanksgiving Holiday Travel Period
    David McNew/Getty ImagesPassengers departing from some markets are paying less for airfare than they did a year ago.
    By Eric Reed

    NEW YORK -- Don't believe the hype. Airfare may be going down, but prices in the skies haven't caught up with those at the pump by a long shot.

    It's become an article of faith among many members of the media that airfares are falling thanks to inexpensive oil prices. Headlines like "Your Florida Vacation Just Got Cheaper" proclaim a new era in dirt-cheap travel and, taken at their word, suggest that the savvy shopper should buy tickets for their next vacation now, now, now while the deals last.

    And yes, it is both true that oil prices have plummeted over the past few years and that airfares have also ticked somewhat (but noticeably) down. Unfortunately, the rest of this narrative falls apart upon closer examination.

    The nose dive in oil has been a huge boon to drivers out there and, according to some economists, to the entire economy.

    Yet while drivers benefit immediately from any change in oil prices, it takes a long time for that to trickle down to airfare, and jet fuel is only one, minor component of ticket prices (although, perversely, one of the airline industry's biggest costs). In fact, according to airline industry journalist Brian Sumers, when it comes to airfares the price of fuel takes a back seat.

    We're seeing some compression in airfares, but mainly in pockets that are competitive.

    It's all about competition.

    "We're seeing some compression in airfares, but mainly in pockets that are competitive," Sumers said. "It's almost all market driven pricing. The price of fuel by itself doesn't lead airlines to lower their prices, but what happens is airlines can be a little more competitive when fuel is cheap, because they can go into a new market that they might not have gone into when fuel was more than $100 a barrel and stimulate the market a little bit." "One of the things that you're seeing is that bigger airlines are [right now] much more likely to match Spirit Airline pricing, so you're seeing $30, $40, $50 pricing for one way tickets," Sumers added.

    Sumers's competition analysis catches what many have mistaken for a market-wide response to fuel prices. Yes, airfare is down on average... but not everywhere, not all at once and not by nearly as much as fuel prices. Prices are falling where there is pressure pushing those prices down.

    For the rest of the country, airlines have already found what the market will bear.

    That's not to say the price of fuel has no impact or that prices haven't moved at all in uncompetitive markets. Fares are dropping nationwide, but it's important not to mistake a single factor (oil prices) as predominant in a market where prices have dropped consistently over the past 20 years.

    Instead, according to Sumers, tumbling fuel prices have allowed airlines more flexibility to reduce prices when they have to compete. As the slash-and-burn approach to costs employed by companies like Spirit Air has made them apex predators against legacy carriers like American and United, bottoming out fuel prices allows legacy carriers to "compress" their prices and stay competitive against the newcomers to the market.

    The airline industry is an oddly segmented beast, however. It's not as easy as strolling down the aisle and giving Delta a try just because it's on sale; some markets are considerably more closed off than others. Few airlines seriously try breaking into Atlanta, for example, Delta's stronghold for decades, and as a result, price wars there are far less likely.

    Cities like Los Angeles or Chicago on the other hand, according to Sumers, are anyone's game.

    For example, according to Department of Transportation data, from the first quarter of 2014 to the first quarter of 2015, average fares out of Chicago dropped about $25 a ticket. Flying out of Atlanta got more expensive by $22 a person.

    "It's not an industry that prices its fares based on how much it actually costs to get from point A to point B," Sumers said. "It prices its tickets based on how much it thinks its customers want to go from point A to point B."

    Which makes sense, particularly for an industry with such heavy investment in infrastructure. Tumbling fuel prices have given airlines a chance to cut costs and pass that along to the customers but only when the pressure's on to do so.

    What does this mean for saving money on tickets, especially with the holiday travel season coming up? Unfortunately for the average consumer not a whole lot. Travelers headed through New York or Chicago, or anyone who can convince dad to carve a turkey-topped deep dish this November, will save a bit of money. Travelers headed into locked markets will spend a little bit more.

    That's the signal, not to be confused with the noise of sliding airfares overall. Yes, oil prices are way down, and for many pieces of the economy (if not the environment), that's a good thing. But it's just one cost in a very complicated machine.

     

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    Volkswagen CEO Resigns: 'Stunned' by Misconduct

    By Andreas Cremer

    BERLIN -- Volkswagen Chief Executive Officer Martin Winterkorn resigned Wednesday, succumbing to pressure for change at the German carmaker, which is reeling from the admission that it deceived U.S. regulators about how much its diesel cars pollute.

    Volkswagen needs a fresh start -- also in terms of personnel. I am clearing the way for this fresh start with my resignation.

    "Volkswagen needs a fresh start -- also in terms of personnel. I am clearing the way for this fresh start with my resignation," Winterkorn said, following a marathon meeting with the executive committee of the VW board.

    The world's biggest carmaker by sales has admitted to U.S. regulators that it programmed its cars to detect when they were being tested and alter the running of their diesel engines to conceal their true emissions.

    Volkswagen (VLKAY) didn't name a successor, but said proposals on management appointments would be made to a full board meeting Friday.

    Porsche chief Matthias Mueller, Audi chief Rupert Stadler and the head of the VW brand, Herbert Diess, are seen as the front-runners to replace Winterkorn, three people familiar with the matter said. Mueller is seen as the favorite among the three due to his years of experience within the group, two of the people said.

    Mueller, a former head product strategist, is also a management board member of Porsche SE, and so close to the Piech-Porsche family that controls Volkswagen.

    Winterkorn, who during his eight years in charge oversaw a doubling in Volkswagen's sales and an almost tripling in profit, said he was shocked that misconduct on such a massive scale had been possible at the company.

    The carmaker was under huge pressure to take decisive action, with its shares down more than 30 percent in value since the crisis broke.

    German Chancellor Angela Merkel had urged Volkswagen to move "as quickly as possible" to restore confidence in a company held up for generations as a paragon of German engineering prowess.

    The U.S. Environmental Protection Agency said Friday that Volkswagen could face penalties of up to $18 billion.

    Since then the crisis has snowballed, with the U.S. Justice Department launching a criminal inquiry, according to a source familiar with the matter. European and Asian countries as well as Canada have also said they are investigating the matter.

    Senior members of Volkswagen's board said in a statement they expected more heads to roll as an internal investigation seeks to identify who was responsible for the wrongdoing.

    German Economy Minister Sigmar Gabriel said Winterkorn was taking responsibility for decisions made when he was at the helm of Audi, rather than Volkswagen.

    No Option

    Volkswagen said Tuesday about 11 million of its cars were fitted with Type EA 189 engines that had shown a "noticeable deviation" in emission levels between testing and road use.

    The company sold 10.1 million cars in the whole of 2014.

    The story has shocked the car market, with dealers in the United States reporting people holding back from buying diesel cars and "#dieselgate" trending on Twitter.

    "The magnitude of this scandal did not leave another option," said Metzler analyst Juergen Pieper of Winterkorn's departure.

    "Winterkorn did a good job and does not deserve to be sacrificed. But given the scale of the problem and that he was responsible for R&D, one has to swallow the pill if something goes wrong," he said.

    Winterkorn had also famously pledged to overtake Toyota Motor (TM) and General Motors (GM) as the world's largest automaker. But the quest for volume has now backfired for Volkswagen as it did with its top Japanese and U.S. rivals. Toyota ultimately acknowledged that it had dropped the ball on quality, contributing to alleged unintended acceleration of its cars. And GM, of course, went bankrupt.

    Volkswagen shares closed up 5.2 percent at 111.5 euros, after earlier touching a four-year low of 95.51. At the stock's lowest point, more than $30 billion had been wiped off the company's market value since the crisis began -- more than the combined equity values of rivals Fiat Chrysler and Peugeot.

    While Volkswagen said Tuesday it was setting aside 6.5 billion euros ($7.3 billion) to help cover the costs of the crisis, analysts doubt that will be enough.

    Commerzbank's Sascha Gommel said if Volkswagen had to recall all 11 million affected cars, the cost of that alone could top 6 billion euros. And the company still faces likely regulatory fines, lawsuits, criminal investigations and a possible hit to sales from a damaged reputation.

    The new CEO will need to address Volkswagen's years of underperformance in the United States -- something which the company's "clean diesel" cars were supposed to help address.

    Some analysts have long called for Volkswagen to relax Winterkorn's highly centralized style of management, which they say made it slow to adapt to local conditions in markets such as the United States and delayed product launches.

    'Investor's Nightmare'

    Environmentalists have long complained that carmakers game the testing regime to exaggerate the fuel-efficiency and emissions readings of their vehicles. European politicians voted on Wednesday to speed up rules to tighten compliance with pollution limits on cars.

    European car association ACEA said that so far there was "no evidence that this is an industry-wide issue."

    But Deutsche Bank called the scandal an "investor's nightmare" and cut its recommendation on Volkswagen shares to "hold" from "buy," predicting rising costs for making diesel cars would wipe out its cost-cutting program.

    Traders said the plunge in Volkswagen shares had prompted some talk it could become a takeover target, with Fiat Chrysler openly looking for a partner, though there is no sign that VW's controlling Piech-Porsche clan is looking to sell.

    Diesel engines power less than 3 percent of new cars sold in the United States but around half of cars in Europe, where governments have encouraged their use to meet fuel efficiency and greenhouse gas targets.

    Their biggest selling point is fuel economy and low carbon emissions compared with standard gasoline engines. But they emit far more nitrogen dioxide, a toxic gas blamed for health problems.

    The suggestion that their emissions are worse than reported in tests could harm the whole sector and alter the future of the car industry worldwide, though the head of Germany's VDA auto industry association warned against calling all diesel technology into question because of the crisis.

    "The Volkswagen issue is another black eye for the diesel engine overall," Mike Jackson, the chief executive of the AutoNation (AN), the largest U.S. car retailer, told CNBC, adding the "brand position" of Volkswagen was at risk in the U.S. market.

     

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    Halloween Pop-ups
    Mel Evans/AP
    By JOYCE M. ROSENBERG

    PARAMUS, N.J. -- Like something out of a horror tale, an abandoned store in this northern New Jersey city has come back to life, as a Halloween retailer.

    Spirit Halloween, a chain of more than 1,150 pop-up shops across the country, has reincarnated the former Staples store and filled it with 4,000 costumes and accessories with themes ranging from zombies to superheroes and princesses to prison inmates. And gory displays: a zombie-filled subway, a swamp surrounded by bloody and screaming animated creatures.

    Spirit Halloween crams a lot of business into a short time. Its staff swells from the hundreds to more than 20,000 starting in June. It makes its revenue for the year in less than three months. The Paramus store, which took six days to set up, opened Aug. 21 and closes Nov. 1.

    We are equivalent to an army operation in terms of the way we mobilize and move products.

    "We are equivalent to an army operation in terms of the way we mobilize and move products," says Steven Silverstein, CEO of the Egg Harbor Township, New Jersey-based company.

    Pop-up stores have been around for decades, but the trend got a big boost when retailers got the idea of short-term rentals for holidays like Halloween and Christmas. Spirit Halloween was launched in 1983, as the holiday's focus was evolving from children and trick-or-treating to parties for people of all ages, Silverstein says.

    Planning for this Halloween began over a year ago. For example, it takes 18 months to design and produce displays like the subway and swamp, which are set up in all the Spirit Halloween stores.

    Employees scout for locations throughout the year. Some are vacant stores in shopping malls, while others occupy stores shuttered by big chains. A second Spirit Halloween in Paramus is five miles up the road in a former Kmart. High visibility is key; both stores are on Route 17, one of New Jersey's busiest shopping boulevards.

    Merchandise starts rolling into Spirit Halloween's warehouses in May. By the summer, sites have been chosen, and by mid-August, the stores are prepped to receive the goods. Trucks start arriving, and the locations go from bare walls and floors to racks and shelves bursting with costumes, accessories, props and home decor.

    Adults' interest in continuing or reviving the Halloween fun of their youth has turned the holiday into a huge money maker. Estimates of what consumers spend on Halloween vary widely, running as high as $11.4 billion on costumes, decorations and candy in 2014, according to the International Council of Shopping Centers. Spirit Halloween, which is privately owned, doesn't announce its sales figures.

    "It has become the national party that everyone participates in," Silverstein says.

     

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    Woman Looking At Banking App On Digital Tablet
    Getty Images
    Since the financial crisis of 2008, some banks have struggled to regain their form. In addition to huge losses suffered during the crisis, traditional banks now face competition in the form of leaner, meaner online-only banks. With decreasing profits and low interest rates, banks have been forced to use different tactics in order to attract new customers.

    This is great news for consumers. With banks fighting to earn your business (and your dollars), you can take advantage of some great deals. In fact, many banks are actually offering you cash simply for opening a new account with them. Here are seven excellent banking promotions available today.

    Capital One 360 Savings - Up to $500 Bonus

    Capital One 360 Savings is offering a bonus of up to $500 for opening a new 360 Savings account. The online/mobile banking account currently offers a 0.75 annual percentage yield with no maintenance fees. In order to qualify for the bonus, you need to transfer at least $5,000 from an account outside of Capital One to your new 360 Savings account within 10 days of opening.

    You also need to maintain that balance for at least 90 days. An important point to note is that I said up to a $500 bonus. Capital One 360 Savings determines the bonus based on a graduated scale. Bonus amounts begin at $50 and climb to $500 on deposits of $50,000 or more. You can see a chart of the complete scale here.

    Chase Checking & Savings - Up to $250 Bonus

    If you're looking for great bank bonuses, Chase has some of the best around. Currently, you can get $150 for opening a new Chase Total Checking account. Just make a minimum deposit of $25 and a qualifying direct deposit within 60 days to earn the bonus. Additionally, you're eligible for a $100 bonus when depositing $10,000 into a new Chase Savings account, provided that you maintain that balance for at least 90 days.

    You may combine both offers to earn the complete $250 bonus. To get the promotion, you must enter your email to receive a coupon, which you'll then need to bring into your local Chase branch. Also, be aware that you aren't allowed to close the accounts within six months of opening or you'll lose the bonus.

    Chase Premier Plus Checking - $300 Bonus

    Chase does it again, offering a $300 sign-up bonus for opening a Premier Plus Checking account.

    Although the basic Chase Total Checking account requires only a $500 direct deposit or $1,500 minimum daily balance to avoid account maintenance fees, the Premiere Plus is a little more strict. You must maintain a $15,000 daily balance or link your account towards automatic payments of your Chase mortgage to avoid the $25 monthly fee.

    However, the account does earn interest and allows you to avoid Chase fees at non-Chase ATMs. Just open a new Premier Plus Checking account with a minimum deposit of $25, and make a qualifying direct deposit within 60 days to earn the bonus. Again, you'll need to receive the offer coupon by email and bring it to your local branch when opening the account.

    Santander Bank - $20 Monthly Bonus

    Rather than offering new customers an upfront bank bonus, Santander Bank's approach is a little bit different. Santander looks to reward customers for their loyalty by offering a $20 bonus each month. Simply open a Santander Bank extra20 checking and savings account with a minimum deposit of $25 and $10, respectively. You'll earn $10 per month for making qualified direct deposits totaling $1,500 within each service fee period. You can earn an additional $10 bonus for paying at least 2 bills through their online bill pay system each month. The bonuses will be directly deposited into your extra20 savings account.

    PNC - $200-$400 Bonus

    PNC offers several different ways to earn a bonus. New customers can earn a $200 bonus for opening either a new Performance Checking or a Virtual Wallet with Performance Spend account. Simply, make qualifying direct deposits of $2,000 or more and pay at least one bill through their online bill payment systemt. You can also earn a $400 bonus for making direct deposits which total at least $5,000 and making one online bill payment. Regardless of the offer, the terms must be completed within 60 days. This offer is only valid for accounts that are opened online.

    BMO Harris - $200 Bonus

    If you are looking to open a new checking account, BMO Harris will offer you $200 to do it with them. Open any one of their three checking accounts, and you'll be eligible for the bonus. Simply, set up qualifying direct deposits to be made to your new account, and you're set to go. The direct deposits must be no less than $300 and be set up to occur no less than on a monthly basis. Further, the first deposit must be made within 60 days of opening the account. To take advantage of the deal, either apply online or have a coupon emailed to you and present it at a local branch.

    Key Bank - Up to $300

    Key Bank is offering new customers up to $300 in bonuses for opening a new checking account. First, you can earn $100 for opening a Key Hassle Free Checking account. The account features no monthly maintenance fees, no minimum balance fees, and no overdraft fees. All you need to do is make direct deposits totaling at least $500 and use a combination of five debit card or bill payments within 60 days. You can also earn a $300 bonus by opening a premier checking account through Key. To earn the bonus, you must make direct deposits totaling at least $1,000 and use a combination of five debit or bill payments within 60 days. Enter either the promo code MASH0615 or MASC0615, depending on the offer chosen.

    Wrapping It Up

    If you're in the market for a new bank, it pays to shop around. Compare each accounts features and make sure that they fit your needs. And, of course, take a look at each bank's promotional offers. Remember, most offers don't last forever, so take advantage of them while you can.

     

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    Baby Clothes on a Budget
    Buying baby clothes doesn't have to rattle your savings. Here are some tips on how to save on styles for your kids.

    Newborns will outgrow their clothes in a matter of months, so try to avoid buying new. Instead, go to a mom-to-mom sale where moms get together to sell the baby items they no longer need.

    Simply do a web search for "mom-to-mom sale" and the name of your city. You'll be surprised by how many you can find in your area.

    If you'd rather shop from home, check out Loteda. They have brands you'll love that are up to 90 percent off retail value. Best of all, you can buy or sell an entire season's worth of children's clothes in one transaction, saving money and time.

    Buying baby clothes doesn't have to hamper your budget. Use these tips and save on all kinds of outfits for your little one.

    View Poll



     

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    Esquire Network Rings The Nasdaq Stock Market Opening Bell
    Slaven Vlasic/Getty ImagesNasdaq and Esquire Network officials ring the opening bell Wednesday at the Nasdaq MarketSite in Manhattan.
    By Caroline Valetkevitch

    NEW YORK -- U.S. stocks ended down slightly Wednesday, led by losses in materials and energy shares as weak Chinese and U.S. factory data added to growth worries.

    Trading was choppy once gain, with the S&P 500 briefly trading higher following afternoon comments by Chinese President Xi Jinping that his country was capable of maintaining a relatively high growth rate for a long time.

    The S&P 500 is down 2.8 percent since Thursday, when the Federal Reserve decided to hold interest rates near zero.

    Data showed U.S. manufacturing growth stayed at a two-year low in September, while Chinese factory activity shrank to a 6½ year low in the month, underscoring worries about demand.

    Boeing (BA) said it had won orders and commitments from China for aircraft valued at about $38 billion at list prices. But its shares fell 1.7 percent to $131.67.

    The S&P materials index, down 2.1 percent, led the decline for the S&P 500 for a second day, followed by the energy index, which was down 1.4 percent.

    U.S. crude oil futures ended down 4.1 percent, while shares of Chevron (CVX) were down 1.5 percent at $76.12.

    "The market looks tired and flat, and there is some hesitation to commit with earnings coming out in two weeks and worries about China and the impact on companies that do a lot of business overseas," said Daniel Morgan, senior portfolio manager at Synovus Trust Company in Atlanta.

    The Dow Jones industrial average (^DJI) fell 50.58 points, or 0.3 percent, to 16,279.89, the Standard & Poor's 500 index (^GSPC) lost 3.98 points, or 0.2 percent, to 1,938.76 and the Nasdaq composite (^IXIC) dropped 3.98 points, or less than 0.1 percent, to 4,752.74.

    Skittish Investors

    Worries over a China-led global economic slowdown and uncertainty over when the Fed may raise rates have left investors skittish.

    S&P 500 earnings are projected to decline 3.9 percent in the third quarter from a year ago, Thomson Reuters (TRI) data showed.

    Volume was light due to the Yom Kippur holiday. About 5.9 billion shares changed hands on U.S. exchanges, below the roughly 8 billion daily average for the past 20 trading days, according to Thomson Reuters data.

    First Niagara Financial was up 14.5 percent at $10.26 after Bloomberg reported the regional bank was exploring a sale.

    Declining issues outnumbered advancing ones on the NYSE by 1,784 to 1,242, for a 1.44-to-1 ratio on the downside; on the Nasdaq, 1,609 issues fell and 1,185 advanced for a 1.36-to-1 ratio favoring decliners.

    The S&P 500 posted 1 new 52-week high and 38 lows; the Nasdaq recorded 24 new highs and 135 lows.

    What to watch Thursday:
    • At 8:30 a.m. Eastern time, the Labor Department releases weekly jobless claims, and the Commerce Department releases durable goods for August.
    • At 10 a.m., the Commerce Department releases new home sales for August, and Freddie Mac releases weekly mortgage rates.
    Earnings Season
    These selected companies are scheduled to release quarterly financial results:

     

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    Never Get Another Robocall Again

    By Marilyn Lewis

    The mobile life is a good life, for the most part, but along with the fun and convenience is a universally hated byproduct: robocalls -- calls and texts sent to your phone without your consent.

    They are illegal. The 1991 Telephone Consumer Protection Act and other rules limit telephone soliciting and automatic dialing. But some unwanted calls are legal and others may get past the walls built to protect consumers.

    Slippery Devils

    It's hard to stop robocalls completely and forever. Some telemarketers are slippery devils, constantly finding new ways to fly beneath the radar. You can block most, though, using apps, phone features, common sense and by signing up for protection through a federal registry. Here are 12 best ways to protect yourself from robocalls:

    1. Don't pick up. Don't answer it. Well, duh, you say: Sometimes you can't tell when a call is from a solicitor. But there are clues. Unfamiliar phone numbers and numbers not recognized by your phone's contact list, for instance. If you're unsure about a call, screen it by letting it go to voicemail.

    2. Join the 'National Do Not Call' registry. Ignoring calls doesn't always stop them, though. In 2004 the Federal Trade Commission launched a national registry where consumers can sign up to block phone and text solicitors. It is super easy to use. It doesn't stop all annoying calls and text spam (see below), but it helps.

    To sign up, go to Do Not Call and enter your phone number or numbers -- cellphones and landlines -- and your email address. You'll get an email immediately with a link to click for activating your request. That's it.

    Telemarketers have 31 days to stop calling a registered phone. But there are some exceptions:
    • Faxes aren't covered.
    • Only personal phones are covered. Business phones aren't covered by the registry.
    • Registering won't stop all solicitations. "Calls from or on behalf of political organizations, charities, and telephone surveyors would still be permitted, as would calls from companies with which you have an existing business relationship, or those to whom you've provided express agreement in writing to receive their calls," the Better Business Bureau says.
    3. Ignore bogus calls from 'the registry.' The Do Not Call Registry doesn't make phone calls. Scammers may call, claiming to represent the registry and trying to get you to "sign up." Don't do it. Hang up.

    4. Complain. If a robocaller persists after the 31-day deadline is up, write down the phone number that appears on your caller ID and use it to file a complaint here, with the FTC. Or call 888-382-1222 (TTY 866-290-4236).

    To complain you'll need the date you received the call and either the company's name or phone number. The FTC requires telephone solicitors to tell you -- if you ask -- their name, whom they're calling on behalf of and their address or phone number. But of course many just hang up when asked.

    5. Block text spammers. Text spam is illegal, too. You can report and block it. Register with the federal Do Not Call Registry (see above). Customers of AT&T, T-Mobile, Verizon, Sprint or Bell can block the spammer's number by forwarding the text, free of charge, to 7726 (SPAM). You'll get a free text back confirming receipt of your spam report.

    "This free text exchange with the carrier will report the SPAM number and you will receive a response from the carrier thanking you for reporting the SPAM," says CTIA-The Wireless Association, an industry group. Alas, this only works with spam sent from a phone number. It's not effective with emailed texts.

    6. Think before you click. Train yourself -- and your children -- to be ultra careful replying to text messages. Do not click on links in texts. Those can introduce malware onto your computer and take you to authentic-looking "spoof "sites that steal your personal information, the FTC warns. Never respond to a text, email or phone request for personal information, account numbers or passwords, even from a company that looks or sounds legitimate.

    7. Hands off the dial pad. Some robocall messages ask you to press a number to be removed from a caller list. That may just add you to more calling lists. Best guidance: Don't respond. You might have seen or heard about key combinations to press when you get a robocall that helps block these calls. But this just tells telemarketers and scammers that you've received their call, encouraging them.

    8. Download apps. Many apps are available to block robocalls. The Wireless Association has links to a number of them, most free and none over $10. Here are the association's links to download apps for each wireless operating systems and brief descriptions of the apps: Before downloading an app, read reviews of it, at an app store or elsewhere online. The safest sources for apps, besides the Wireless Association site, are Google Play and the App Store (read 8 Simple Steps to Avoid Getting Burned by New Apps on finding and downloading apps safely).

    9. Change your phone's settings. If you are getting harassed by calls, you can block a phone number to prevent calls or texts from it to your phone. Do this through a feature in your phone's settings. Watch brief, simple videos showing how to do this at the links above for Android, Microsoft, iOS and Blackberry devices.

    10. Be wary of sharing your phone number. Help keep your number out of the hands of scammers and robocallers by taking care when giving it out. Treat it as private information. Avoid entering it in forms if possible, or use an old, out-of-date number or a made-up number instead.

    11. Keep an eye on your phone bill. Read your bill each month to spot unauthorized charges. Report any you find to your carrier.

    12. Ignore rumors. Rumors and viral emails about the Do Not Call Registry sometimes make the rounds. One such scam warns that if you've signed the registry you need to re-register or your name or phone number will be made public. Or you may be asked to sign a petition to prevent registry names and numbers from becoming public. Don't bite.

    Says Fox News:

    For the record, mobile telephone numbers have never been in any danger of being made public or released to telemarketers. There has never been a deadline to register your cellphone. And you don't need to renew every five years (this was a rule for landlines that was axed in 2007).

    The best defense against scammers and spammers is to be on guard against emails carrying warnings or rumors that require your action. Never click a link from inside an email. If you must check it out, copy the link address from the email and paste it into a browser.

    Have you been able to prevent robocalls and texts? Share with us in the comments section below or on our Facebook page.

    Like this article? Sign up for our newsletter and we'll send you a regular digest of our newest stories, full of money saving tips and advice, free!

     

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    Stocks Close Down Day After Federal Reserve Leaves interest Rate Unchanged
    Getty ImagesThe recent decline in U.S. equity prices has created some undervalued equities on Wall Street.
    By Peter Ashton

    The past few weeks have seen huge jumps in the level of market volatility as investors have seesawed between bullishness and bearishness on a near-daily basis. The Chicago Board Options Exchange volatility index (^VIX), a measure of market volatility, hit a 52-week high on Aug. 24. Many large-capitalization U.S. stocks find themselves trading 5 percent to 10 percent lower than where they were just a few weeks ago. Although their fundamentals have not changed, many of these stocks now find themselves "on sale" and may represent a buying opportunity for patient, long-term investors.

    We'll use the principles of value investing to search for stocks that now appear undervalued as a result of the recent decline in U.S. equity prices.

    Principles of value investing. Value investing as an investment discipline is not a set of hard-and-fast rules. Rather, it is a set of principles that have been laid down over time by some of the world's greatest investors. We are looking for companies matching the following principles of value investing:
    1. Find companies with a long-term track record of growing revenue and earnings per share. Rather than being concerned with the last quarter's earnings, value investors wish to invest in companies that have displayed a long-term (10 years or more) history of growing their businesses.
    2. Favor companies with low debt. Debt becomes a drag on a company's earnings - especially in the environment of increasing interest rates.
    3. Prefer companies that pay a dividend and ideally have a strong track record of increasing their dividend payouts over time.
    4. Find companies with consistent numbers of shares outstanding. Each time a company issues new shares, it dilutes the equity of existing shareholders. We wish to avoid companies that are constantly issuing new shares.
    5. Most importantly, we wish to find companies which trade below their fair value. Fair value is a concept with many definitions. In his book "One Up on Wall Street," famed value investor Peter Lynch says that a company was fairly valued when its price-to-earnings ratio equaled its historic EPS growth rate. This definition makes intuitive sense, as we should be willing to pay more for a stock that is enjoying a higher rate of earnings growth.
    Although the above are by no means an all-inclusive shopping list for value investors, they do form a useful starting point to screen for value stocks.

    The screen. We used the Recognia Value Analyzer to search for U.S.-traded stocks that display good characteristics of value investing, despite the current run-up in equity prices. Here are the results:

    Priceline Group (PCLN) is an online flight, hotel and car booking service operating under the priceline.com, booking.com, OpenTable and Kayak brands. It has been a high-flying stock for years, but has seen its share price cut by approximately 5 percent in the past month. The stock has a long-term track record of consistently growing its revenue and earnings and has a trailing P/E ratio of 29. On Aug. 5, the company reported second-quarter results that beat analyst expectations for both revenue and earnings. In spite of this, investors have punished the stock, which is trading down by 3 percent year over year.

    Edwards Lifesciences (EW) is a medical equipment company specializing in artificial heart valves. The company has a market capitalization of just more than $3 billion and has a long track record of growing revenue and earnings. Edwards now has a 10-year EPS growth rate of 19 percent. Many biotech stocks enjoyed high valuations prior to the recent period of market volatility and as a result have seen their prices slashed as investors flee risk for safer investments. Edwards is trading down 11.5 percent since achieving a 52-week high on July 29.

    LKQ Corp. (LKQ) is a Fortune 500 company specializing in replacement components and systems for cars and light trucks. LKQ fits many of the classic value-investing principles, with a consistent history of revenue and earnings growth, a low debt and trading below its fair value. After losing approximately 10 percent of its value in the volatile days of late August, LKQ has started to rally back and has made up about half of this amount.

    The investment ideas presented here are for information only. They don't constitute advice or a recommendation by Recognia Inc. in respect of the investment in financial instruments. Investors should conduct further research before investing.

    Peter Ashton of Recognia is a blogger for The Smarter Investor. You can follow him and Recognia on Twitter at @Recognia_Peter and @Recognia.

     

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    Miniature house with a calculator
    Getty Images
    By Brian O'Connell

    NEW YORK -- Adjustable rate mortgages, the bane of consumer advocates and the trap door for hundreds of thousands of homeowners who saw their mortgage payments rise in the heat of the Great Recession, are staging a comeback.

    "Now there are signs that adjustable rate mortgages, which faded out of sight a few years ago, may be achieving a new life of sorts," says Michael Moskowitz, president of Equity Now, a direct mortgage lender in New York. "Some borrowers see them as a way to save money and to make it easier to qualify for a mortgage."

    Mostly, ARMs are rallying around larger mortgages. The Wall Street Journal reports that ARMs comprised 22 percent of all mortgages between $417,000 and $1 million in 2013, but that rate jumped to 31 percent in 2014, and continues to climb.

    Moskowitz says adjustable rate mortgages work best if you only plan to live in a home for a short period of time. In that case, an ARM is worth it.

    "If you have a choice between a 30-year fixed loan at 3.82 percent and a hybrid 5/1 ARM, which stays fixed for five years, at 3.32 percent, the savings over the first five years can save big bucks on mortgage payments," Moskowitz says.

    Those who may want to consider ARMs include those who work for a company that moves people around every five years or so or those who are planning to sell their home in five years and move to Florida, he adds.

    Mortgage lenders also have done a decent job of improving ARM loans, some experts say.

    "ARMs have been unjustly blamed for the meltdown, although there were some truly toxic varieties that have since gone thankfully extinct," says Joe Parsons, managing partner at PFS Funding, a mortgage banking firm located in Dublin, California. "For example, today's ARM -- especially the intermediate term, or 'hybrid' variety -- can be a powerful tool for certain homeowners."

    Parsons explains why.

    First, the rate is significantly lower than for an equivalent fixed rate loan, he says. "A five-year ARM, for example would have a rate of 3.625 percent, where an equivalent 30-year fixed loan would be at 4.125 percent," he says. "For a $300,000 loan, the five-year ARM would have a payment of $1,368, where the 30-year fixed would be $1,454 -- a difference of $86 a month."

    ARMs also carry limitations for the way and amount they can adjust when the fixed period ends.

    "Typically, the adjustments are limited to 2 percent in any given year," Parsons notes. "Loans adjusting today would carry a rate below 3 percent, although that figure will certainly change as the loan indices change. For a buyer intending to remain in a home for a predetermined length of time, that borrower could still save a great deal of money with very little risk."

    Still, as long as the Federal Reserve keeps interest rates low, the mantra for mortgage borrowers may well be "safety first."

    "ARMS really are great for short periods but fixed mortgage rates provide security and, except for last year, fixed rates are at their lowest levels since the 1800's," notes Ken Maes, Northwest divisional vice president of Oregon-based Skyline Home Loans.

    Adjustable rate mortgages may be an acceptable option for sophisticated consumers who have the ability to take action if rates rise.

    Other mortgage experts support that sentiment.

    "Adjustable rate mortgages may be an acceptable option for sophisticated consumers who have the ability to take action if rates rise," says Kevin Stein, associate director of the California Reinvestment Coalition. "But for your average homebuyer, we'd strongly caution against getting locked into an ARM loan where you don't have control over the interest rate."

    If and when interest rates rise, your monthly housing expenses will also rise, which translates to having to cut your expenses elsewhere (if you can) or increase your income -- a difficult proposition in today's economy, he adds.

    Plus, if you think you simply refinance to a lower mortgage loan rate when the ARM ate triggers upward, think again.
    "People may think or be told they can always refinance later when the rate goes up, but there is no guarantee that rates will be lower when a refinance is needed, and refinance loans usually come with some additional cost to the borrower," says Stein.

    Bottomline: So there you have it, mortgage consumers -- adjustable rate mortgages are edging back into the spotlight, and that could be good news or bad news, depending on how you use them.

     

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    Inside A HireLive Retail Job Fair As Initial Jobless Claims Are Released
    Luke Sharrett/Bloomberg via Getty ImagesSteady job growth is just one sign of an improving economy.
    By Simon Constable

    NEW YORK -- The state of the U.S. economy is almost Dickensian: It's the best of times and the worst of times. There are reasons to be bullish as well as reasons to be bearish.

    First, the good news:

    1. The housing market continues to recover, albeit at a moderate pace. Of particular note is the positive trend in home-construction permits. The number issued has grown year-over-year each month since May 2011, with the exception of a slight pullback in March of 2015, according to government data. Housing starts followed a similar pattern.

    Permits are a particularly useful metric because they point to likely future economic activity, since houses require lots of materials such as copper wire, lumber, concrete and glass, as well as appliances. Plus, you need labor to build everything. So when you see a permit issued, it tends to be good news for the economy. In general, the more permits the better.

    If the upward trend keeps going, it would be a boon to companies that supply such products, like those held in the SPDR Materials Select Sector (XLB) exchange-traded fund. Home-builder stocks, like those in the SPDR S&P Homebuilders (XHB) ETF, would do well also.

    2. For big business, getting a loan is easier. "Banks reported having eased some loan terms, such as spreads and covenants, especially for larger firms," according to the Federal Reserve's Senior Loan Officer survey during the summer. There was also stronger demand for such loans from some banks.

    Why does this matter? Loans taken out by businesses are typically used to invest in capital and equipment. They only purchase such equipment when the managers feel optimistic about future economic activity. If they are taking out more loans, they are likely optimistic, and that's good news for the economy.

    3. The labor market continues to improve, and the outlook is good. "The number of private companies intending to hire over the next 12 months is at a post-recession high, which bodes well for the nation's payroll increases overall," according to the Trendsetter Barometer Survey from PwC, a report that measures the outlook by top managers of private companies.

    The data has historically tracked well with what happens in the real economy. In this case, consistent hiring would push the economy into a so-called virtuous circle: New employees spend more, thus boosting the economy further so that more people get hired.

    Still, there are some signs that all isn't well.

    1. The Aruoba-Diebold-Scotti Business Conditions Index, reported by the Philadelphia Federal Reserve, shows a slowing economy for most of 2015. The index is a real-time gauge of the economy, more timely than some other measures, like GDP growth, which can take weeks to produce.

    Its read on the economy is corroborated by The Economic Cycle Research Institute, which notes that the U.S. Coincident Index has been declining all year. Slow growth isn't negative growth, but if you slow down enough, you can fall below zero, so it's worth watching closely.

    2. The risk appetite of investors has declined dramatically. The amount that bond investors need to be paid to lend money to reasonably creditworthy corporate borrowers, versus what they'd be paid by the government, has increased a lot lately. It's known as the credit spread. For those investment-grade bonds rated BBB, the spread has steadily marched higher since mid-May this year, according to the BofA (BAC) Merrill Lynch US Corporate BBB Option-Adjusted Spread data at the St. Louis Federal Reserve. It was 1.8 percentage points in the spring, and now it's 2.2. Historically, wider spreads augur slower growth, but to be fair, this process can take a while.

    3. The manufacturing sector isn't doing well. The Philadelphia Federal Reserve's Business Outlook Survey, which examines the manufacturing sector near Philadelphia, dropped into negative territory this month. The latest reading for the New York Fed's Empire State survey spent a second month below zero as well, indicating contraction.

    While manufacturing is typically much more cyclical than the services sector, there are two issues to be concerned about here: First, is that supply chains for factories are often intertwined across the globe, so the slowdown in China may crimp manufacturing in the U.S. Second, a stronger dollar may crush sales for some manufacturers as it makes their products more expensive to foreign buyers.

    The net worry is that the manufacturing sector pulls the rest of the economy into recession. What happens over the next few months will determine exactly whether the U.S. tilts to faster growth or falls back to a more anemic pace.

    This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

     

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    Man Calculating Home Finances At Table
    Getty ImagesWith these tools you can calculate how much to save for emergencies and organize financial paperwork.
    By Kimberly Palmer

    When Johnny and Joanna Galbraith got married eight years ago, they quickly realized they needed a way to coordinate their spending and saving with each other. "We didn't know what we were doing at the beginning of our marriage, but we opened up a joint checking account to make it easier to communicate," Johnny, 30, recalls. That account only addressed a small subset of their finances, though. "We still needed to find the time to chat about goals and what's motivating us," he says.

    The Gailbraiths, who live in Salt Lake City with their two young daughters and have since founded the money website ourfreakingbudget.com, started tracking their financial accounts through shared Google Drive documents and reviewing them together once a month. To share daily spending with each other, they use the HomeBudget app, which syncs across their phones.

    As the Gailbraiths discovered, managing household finances can be challenging, especially when it requires coordinating multiple people's spending habits and staying on track to meet shared goals. While Mint, a free money management website and app, is often cited as the best starting place, a handful of new tools have hit the market in recent years that give consumers more options.

    A recent cash flow management tool competition hosted by the Financial Solutions Lab, which is funded by JPMorgan Chase (JPM), received almost 300 contenders. "There's been a revolution in personal financial management tools. It's a big trend over the last few years," says Colleen Briggs, vice president of financial capability and consumer initiatives at JPMorgan Chase. "If you give people better information and pair it with a product around their needs, that's where you see people building better habits," she adds.

    Here are more tools that can help you stay on top of your household finances:

    HomeBudget app. The tool embraced by the Galbraiths allows both of them to log in at any time and check out their latest spending updates. "We tried out Mint, but it felt so automatic and easy that we found we weren't checking it often enough and we weren't feeling the pain of our spending," Johnny says. On HomeBudget, Johnny and Joanna, 28, manually enter their spending right after a purchase, and that transaction is then shared with the other person. ​(To keep gifts a surprise, they stay off their accounts for a couple of weeks around the holidays.) They each paid about $5 to download the app to their phones.

    Shared spreadsheets. To track their net worth, including savings, 529 account balances and retirement investments, the Galbraiths update a spreadsheet on Google Drive, which is free and accessible to both of them. It also forces them to sit down once a month to review their accounts and manually update them. They keep account numbers and passwords offline, though, to protect their accounts from potential fraud.

    HelloWallet's emergency savings calculator. While many people know they need to save more, doing so -- or knowing how much they need to save -- is not always easy to figure out. That's why Morningstar's (MORN) HelloWallet, ​an online financial wellness company, recently launched a free tool that allows people to calculate an emergency savings goal for themselves, based on their expenses, lifestyle and earnings.

    "There's a lot of generic emergency savings advice out there to have six months or 10 months of salary saved, and if you think about it, you realize that's pretty insufficient in terms of advice. One person might need that much, and someone else might need far less," says Aron Szapiro, ​policy and finance expert at HelloWallet. ​

    For example, a two-income family that has 80 percent of income going toward fixed expenses needs a much larger emergency savings fund ​than a couple that could live off just one person's salary should a job loss occur. And since most people aren't saving enough for emergencies, Szapiro adds, aiming for a specific target can make it easier and less overwhelming to set money aside.

    FileThis. If you struggle to keep track of an ever-growing collection of financial paperwork, then this tool is for you. Co-founder Brian Berson was inspired to create a digital way of organizing financial papers after finding himself suddenly in charge of his mother's paperwork when she became ill. ​"[My family] had to go through four huge filing cabinets of paperwork and figure out what we needed," he says. After mistakenly tossing documents and then having to ask financial institutions to resend them -- a process that took hours -- he decided to create FileThis in 2011.

    "It's a digital filing cabinet," he explains, and​ it automatically uploads financial account information, bills, W-2s, health insurance information, tax documents and other essential paperwork from banks to insurance companies​. All the data is encrypted and can be downloaded (or deleted) at any time. The "freemium" model offers free automatic uploads from up to six institutions and then costs $2 a month for up to 12 connections to institutions​. The rates go up from there for consumers who want more connections. While FileThis doesn't disclose its number of users, Berson says the number has grown 500 percent over the past year.

    Puddle. Aimed at consumers with limited access to traditional credit sources, Puddle, one of the winners of the Financial Solutions Lab competition, makes it easy to borrow and lend money to friends, family members and other users through small, short-term loans.​ "Sometimes people just need extra cash for things -- a lot of people borrow for travel -- and [Puddle] establishes a line of credit for people who need it," says Skylar Woodward, one of the co-founders of Puddle. Over $1 million has been borrowed through the website, with amounts ranging from $250 to $2,000 for periods between three and six months. Most Americans, Woodward adds, don't have access to liquid cash when they need it, and this tool meets that need. ​

    The goal of all these tools is to make managing finances easier and more automatic, so you can spend your time on more enjoyable activities. As Johnny Galbraith puts it, "There's 100 Netflix shows that we'd rather watch than talk about finances." But they use their motivation to save as a way to power through those important conversations. "Wouldn't it be great if we could save for our girls' college education now when we don't have a lot of other expenses, or save for retirement or vacation?" Those discussions, he says, leads them to set mutual savings goals, which helps guide their daily spending choices in a relatively painless way.

    Kimberly Palmer is a senior editor for U.S. News Money. She is the author of the new book, "The Economy of You." You can follow her on Twitter @alphaconsumer, circle her on Google Plus or email her at kpalmer@usnews.com.

     

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    Volkwagen Brand in Tatters
    Michael Sohn/AP
    By GILLIAN FLACCUS and TOM KRISHER

    LOS ANGELES -- Bob Rand bought his Volkswagen Passat last year for its clean emissions and high gas mileage. He liked the car so much he convinced his son and a friend to buy one, too.

    Now, as Volkswagen comes clean about rigging diesel emissions to pass U.S. tests, Rand is desperately trying to sell the fully loaded model with white leather seats for $10,000 below what he paid. His sole bite has been from a man who offered $7,500 on speculation that he could resell it in Mexico.

    That's probably about as bad a thing as a company can do is lie to your face when you're buying a $35,000 car.

    "Volkswagen was somebody that you could rely on for cutting-edge products and quality and all those things and now you find out that they're not above lying just flat out," said Rand, who plans to join a class-action lawsuit against VW. "That's probably about as bad a thing as a company can do is lie to your face when you're buying a $35,000 car."

    Rand's anger at the world's top-selling car company was echoed Wednesday by private dealers, auto wholesalers and owners across the U.S. as fallout from the smog test trickery mounted.

    The U.S. Environmental Protection Agency first disclosed Friday that stealth software makes VW's 2009-2015 model cars powered by 2.0-liter diesel engines run cleaner during emissions tests than in actual driving. On Wednesday, Volkswagen CEO Martin Winterkorn resigned and took responsibility for the "irregularities" found by U.S. inspectors -- a scandal that has wiped out billions in the company's market value and raised the possibility of criminal investigations and billions more in fines.

    The revelations left dealers sitting on hundreds of diesel cars they could not sell. Many also dealt with a flood of angry calls, emails and tweets from Volkswagen owners who felt betrayed because they believed they had bought a car that polluted less without sacrificing the good gas mileage and performance that comes with a diesel engine.

    "I think their feet should be held to the fire. I think apologies don't mean anything when something is so premeditated," said Joe DeCarolis, of Cary, North Carolina, who owns a 2012 TDI Jetta Sport Wagon -- a car he bought after careful comparison shopping for its clean emissions and good gas mileage.

    Dealers can't give customers good answers because Volkswagen hasn't said a whole lot, said AutoNation (AN) CEO Mike Jackson, the leader of the largest auto dealership chain in the U.S.

    'Needing Answers'

    AutoNation's six Volkswagen and eight Audi dealerships in the U.S. are telling customers that the cars are safe to drive and promising to call them as soon as they know more about repairs. "That's not adequate," Jackson said. "We need answers by next week."

    A lot of people within VW had to know about the software that turned emissions controls on during government tests and off for regular driving, especially because the scheme went on for multiple years, Jackson said.

    "This tells me that it's not a bad apple. It's not a rogue employee. It's deliberate deception," Jackson said. "It's a systemic failure. This took a lot of meetings. This took a lot of engineers. This took a lot of software programmers to put in place and keep in place."

    Meanwhile, concern was growing at private dealerships about what to do with inventory that's now gathering dust.

    At Volkswagen of Oakland, California, nearly two dozen new diesel cars have no chance of being sold in the short-term, while 25 2016 model vehicles are being held up at the Port of San Diego because they can't pass emissions standards, sales manager Chris Murphy said. Customers have been calling and emailing to demand the dealership buy their cars back or offer refunds.

    "We can't afford to buy all those cars back. We're just one dealer," he said, adding that diesel models make up about 30 percent of the business. "This is definitely going to impact our business. We're trying to focus on positive, not negative things because there's nothing we can do."

    Volkswagen has taken steps to help out the dealership, Murphy said. That includes guaranteeing reimbursement for sales objectives for two quarters whether or not the goals are met and waiving the interest the local franchise normally pays on unsold cars on their sales floor, he said.

    'Making the Right Steps'

    "They're making all the right steps. ... I'm just waiting for everything to get uncovered to see how deep this really goes. I'm not mad at anyone except the people higher up who made these decisions," Murphy said.

    Lash Volkswagen of White Plains, New York, will accommodate affected Volkswagen owners by giving them loaner cars and picking up or dropping off their cars when it's time for repair, said Tom Backer, general manager of the dealership in New York's Westchester County.

    Dealers, he said, were told that there will be both software and hardware changes to fix the problem. They're already on 2016 models and are awaiting approval from the Environmental Protection Agency, Backer said. Older models will get the same fixes, he said.

    "What we say is, 'Let's wait a little bit and see how exactly this all shakes out,' " Backer said.

    But not every Volkswagen dealer is fielding calls from angry customers.

    Bill Haggerty, a sales manager at a VW dealership in the Chicago suburb of Oak Lawn, Illinois, said he hasn't heard concerns from customers so far. Diesels make up less than 20 percent of his business and draw the most interest from customers looking for better gas mileage, he said.

    "We have 200 Volkswagens in stock; three of them are Jetta diesels," he said. "So, it's not like every Volkswagen out there has got a diesel motor in it. They sell an awful lot of cars with good gas mileage and great safety records."

    -Krisher reported from Detroit. Associated Press reporter Jason Keyser in Chicago contributed to this report.

     

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    durable goods orders august economy
    Charlie Riedel/APA worker inspects a 2015 Ford F-150 truck at the company's Kansas City Assembly Plant in Claycomo, Mo.
    By MARTIN CRUTSINGER

    WASHINGTON -- Orders for long-lasting U.S. manufactured goods dropped in August with weakness in a key category that tracks business investment plans.

    Orders for durable goods fell 2 percent last month in contrast to July when orders had risen by 1.9 percent, the Commerce Department reported Thursday. A key category that serves as a proxy for business investment edged down 0.2 percent last month after gains of 2.1 percent in July and 1.5 percent in June.

    The underlying demand for manufactured goods has been weaker this year as a strong dollar and China's economic slowdown have dragged down demand for American exports and big declines in oil prices have resulted in cutbacks in investment by energy companies.

    Still, economists said the 2 percent August decline overstated the weakness in manufacturing because much of the drag last month came from a huge 19.3 percent fall in orders for defense equipment, an extremely volatile category. Excluding defense, orders would have dropped a smaller 1 percent in August.

    Paul Ashworth, chief U.S. economist for Capital Economics, said the small 0.2 percent setback in the business investment category had been expected given the strong gains in this area in the previous two months.

    "Investment in equipment appears to be recovering in the third quarter," Ashworth said in a research note.

    For August, demand for commercial aircraft fell for a second month, dropping 5.9 percent after an 8.7 percent decline in July. In June, this volatile category had shown a 69.9 percent increase.

    Orders for motor vehicles and parts fell 1.6 percent after gains in the two previous months.

    Orders outside of the transportation categories were flat in August after a modest 0.4 percent rise in July,

    Demand for machinery was up 1 percent but orders for computers fell 5.7 percent.

    The Institute for Supply Management said that its manufacturing index slid to a reading of 51.1 in August, its lowest level since May 2013. It was the second straight drop for the manufacturing index. Anything above 50 signals growth.

    The rising dollar makes U.S. goods more expensive in foreign markets while weakness in China, the world's second biggest economy, also serves as a drag on the global economy.

    The overall economy, as measured by the gross domestic product, grew at an annual rate of 3.7 percent in the April-June quarter, an estimate that will be revised on Friday. Private economists believe the GDP estimate for the second quarter will be unchanged at 3.7 percent, which represented a sharp increase after an anemic 0.6 percent increase in the first quarter.

    Economists are forecasting that growth in the current July-September quarter will slow slightly to around 2.5 percent, reflecting in part an effort by businesses to trim their stockpiles after a big rise in inventories in the spring.

     

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