Don't wait till 30; start investing now: Roongta Sec

Roongta said, "Since you have a longer time horizon, you can allocate more towards your high-risk, high-reward assets such as equities. As you grow older, the equities allocation will start reducing over a period of time."

Also Read: Investing for tax saving? Choose your options wisely

Below is the verbatim transcript of the interview

Q: A lot of people delay their investments in the hope that there is enough time or maybe they do not have sufficient surplus to invest early in their careers. How beneficial is it to begin investing early or can it be delayed by a few years?

A: To answer first question, let me use an example to explain how it is beneficial to start investing early. If you take a case of a 30-year-old person who sets aside Rs 1,000 a month, this is just for calculation purposes for a period of 30 years and has anticipated retirement age of 60 years. If you generate a long-term return of equity 14 percent annualized return, the corpus that this person will accumulate would be about 54 lakhs with Rs 1,000 over 30 year period. If he delays this by just five years, he says that I have enough time for retirement; I can probably start investing at 35. If he starts making the investment from 35 years of age, so he has another 25 years left, if he invests the same Rs 1,000, the corpus that he will accumulate will not be 54 lakhs but it would be about 26.5 lakhs.

So, it is about half of what he would have accumulated otherwise by just a five years period that he has delayed. That is the price that he would pay. Suppose, if he needs to accumulate the same amount of 54 lakhs by starting at 35, he has to now start investing Rs 2,000 a month for the next 25 years. This is the cost that you would pay to delay every year of your investment. So, there is a huge cost that you are paying not only in terms of losing time but even otherwise. There are other benefits too. If you start early, there are usually less liabilities in the early years. So, there is less burden on your finances if you are setting aside some money for investments.

Besides, since you have a longer time horizon, you can allocate more towards your high-risk, high-reward assets such as equities. As you grow older, the equities allocation will start reducing over a period of time. So, these are couple of benefits. What I would normally recommend or suggest is that why even wait for 30 years of age. If the first time you get your pay cheque, ideally an investor should start investing immediately, set aside a portion of it for his long-term requirement.

Q: How will you priorities? What if the investor wants to go for a house, would that be the priority and not think of putting some money aside for retirement?

A: Buying a house is a very tricky question. If you are buying a house early in your life for your self occupancy purposes then it maybe right to allocate all your investments for EMI purposes for your house purchase. But if the purpose of buying the house is again only for an investment purposes, then you need to stick to your asset allocation plan, which is that you need to have some bit on equities, into debt, you need to have precious metals into your portfolio and then real estate.

So, it depends on what is the purpose of buying the houses. If it's for self occupancy that you can allocate your entire fund for a moment and as your income increases going by you can start having equities and debt into your portfolio. But if it's for investments then it is better to stick to asset allocation plan.

NYSE to House LIBOR from 2014 - Analyst Blog

NYSE Euronext Inc. (NYX) announced that it has become the first exchange to be appointed to administer the benchmark interest rate for short-term unsecured loans – London Inter-Bank Offered Rate (LIBOR). The achievement would solidify its fundamental base through diversification.

NYSE has won this esteemed contract on a nominal token expense of £1 million ($1.49 million) and is expected to manage LIBOR by early 2014. The company will manage LIBOR through a new division – NYSE Euronext Rate Administration Ltd. – by implementing a competitive bidding process.

The LIBOR Story

LIBOR is used for over 500 trillion contracts across the globe, within dealings ranging from derivatives, bonds, mortgages and student loans to credit card bills, among others. The London-based British Bankers' Association (BBA) initiated this interest rate benchmark in 1986.

Currently, the interest rate is computed through a daily poll by Thomson Reuters on behalf of the BBA. In this poll, banks and firms are asked to estimate the rates for about 15 different time durations and in various global currencies, the average of which is set as the LIBOR.

However, this global benchmark rate lost color last year, when several banks involved in estimating this rate were found guilty of manipulating LIBOR in order to gain from derivative trading positions. Since then, UK's Financial Conduct Authority (FCA) began regulating LIBOR, while many guilty banks such as Barclays Plc (BCS), UBS AG (UBS) and Royal Bank of Scotland Plc (RBS) were penalized recently with over $2 billion in both the US and UK. While the investigations are going on, more financial institutions are being brought under the radar.

LIBOR – Boon or Bane for NYSE?

Following the rate-rigging case, a neutral committee of regulators from the UK Treasury chose NYSE, while 2 other UK-based rival exchanges had submitted tenders for managing LIBOR. However, NYSE awaits the approval of FCA, which will watch over the LIBOR t! rade.

While this new proposition raises commercial and growth opportunities for NYSE, setting up a new LIBOR platform could cost NYSE about £1.6 million ($2.38 million), along with an estimated operational cost of £1 million annually.

Although NYSE aims to revive the lost glory of LIBOR, the global regulators are concerned regarding a financial institution taking control of it. Most of the market investors and policy makers prefer an independent third-party to compute this rate with transparency, which could mitigate the risk of further rigging of globally acknowledged rates in the future.

Hence, considering the pros and cons of the scenario, we currently remain on the periphery to analyze further developments. Barclays, UBS and NYSE carry a Zacks Rank #3 (Hold).

Potash Corp: 5 Fundamental Reasons To Buy

I have written two articles discussing the recent events in the potash industry, and why I am long Potash Corp (POT). The first article describes how the Uralkali-Belaruskali fallout will impact the potash market in the short and long run. The second article describes why I believe that POT is not as exposed to the perceived macro headwinds as many believe. In this article, I will attempt to address my readers' questions and examine all the major fundamental reasons why I am long POT. If you read to the end, I will also offer my unique perspectives on the whole Uralkali spectacle.

Reason No. 1: Low Cost Producer Equals Forever Business

Potash is an abundant commodity with enough global deposits to last essentially forever. However, Potash deposits that are economically minable are concentrated in only a handful of countries and dominated by a handful of producers like Uralkali, Belaruskali, K+S, Potash Corp , Mosaic (MOS), Agrium (AGU), and Intrepid Potash (IPI).

In the short-run, potash prices will fluctuate widely. At the beginning of 2008, Potash prices started a meteoric climb from less than $200 a tonne to a high of $875 in Feb. 2009. These subsequently dropped dramatically to an April 2010 low of $310 level, before recovering in 2011-12, and relapsing again in 2013. For reference, prices in November 2011 were about $470 per tonne, but as of May 2013 were stable at ($393).

However, long-run prices are driven by the nearly inevitable global population growth to 9 billion by 2050 and the increasing affluence of emerging markets. (I said "nearly inevitable" because, who knows, a new virus or WW3 could wipe out the majority of humanity... in that case, I will have better things to worry about than my POT shares). Since the existing potash companies essentially picked the lowest hanging fruits (i.e. the economically minable deposits), generally speaking, they will always have a price advantage over any new entrants. And since the world is eating more and mor! e, they will always have business.

Lowest-cost producers like POT will not have to worry about going out of business due to short-term price fluctuations because the lowest the price will go to, under normal circumstances, is the marginal producers' cost of production. Even at $300 per tonne potash, POT will have approximately 40-50% gross margins for its potash business.

Potash investors must have a strong stomach to withstand short-term fluctuations. However, buying a low-cost producer like POT will help you sleep better at night.

Reason No. 2: Uralkali's Impact on the Market and POT is Overestimated

For a detailed treatment, read my article here. Three key points to understand are as follows:

Even if Uralkali produces at full capacity, it will only be an addition 1.5 to 2.5 million tonnes of potash annually. Uralkali's CEO predicts that 2014's global potash demand will grow by 10% to exceed 60 million tons.Only 23% of Potash's revenues and an estimated less than 23% of gross margins will be fully impacted by Uralkali's actions. Remember, POT dominates the North American market and is a diversified business.JPM estimates that the modeled price drop caused by Uralkali's actions will only lead to a small drop in POT's earnings per share from $2.50 to $2.35 EPS.

Reason No. 3: POT's 4.7% Dividend Yield Is Safe

At current price levels of around $30 per share, POT carries a very rich dividend yield of 4.7%. Many people are worried that the change in the potash landscape will force POT to slash its dividends, which will lead to a major sell-off of POT shares. However, these people are not considering a fundamental change within POT itself: the conclusion of its CapEx program.

According to an 8/7/2013 interview with POT's CEO, Bill Doyle (that is "Good Ol' Bill Doyle" to you), POT is 90% done with its CapEx program to expand its potash capacity to a whopping 17.1 tonnes (the second-largest company by capacity is Uralkali at 13 million tonnes).

POT's cap! acity exp! ansion has been a major drag on free cash flow in recent years, so a wind down of the company's expansion projects will lead to a boost to free cash flow.

(click to enlarge)

(click to enlarge)

Given POT's historical CapEx and free cash flows, I estimate that POT will be able to generate a free cash flow yield of 5-7% over the next several years, enough to support its current dividend yield.

(Source: POT 2012 Annual Report)

Reason No. 4: Replacement Value Is Much Higher

How much do you need to spend to rebuild POT?

A good - actually, nearly perfect - proxy for estimating POT's replacement value is the estimated cost of BHP Billiton's (BHP) Jansen Project, a large potash project in Saskatchewan, where POT is based. The Jansen project is expected to achieve a capacity of 8 million tonnes a year at an estimated cost of $16 billion dollars. Thus, by way of simple mathematics, POT's potash capacity alone is worth approximately $32 billion dollars. Since POT is currently trading at $26 billion, this implies that the whole company is trading at $6 billion less than its potash capacity alone.

Now, remember, in addition to getting a $6 billion discount to the replacement cost of POT's potash capacity, you are also getting - for free - the following assets:

An extensive, global distribution system,Relationships with major clients,A nitrogen business that grossed $978 million in 2012,A phosphate business that grossed $469 million in 2012,Shares of various fertilizer companies that is worth (very) roughly $5 per POT share (see chart below),And off-balance sheet goodwill (like The Good Ol' Bill Doyle - for free!)

All I know is that POT is worth significantly more than $30 a share - in the long run.

(click to enlarge)

(Source: POT 2012 Annual Report)

Reason No. 5: Built-In Optionality

The bad news has been priced in. All the analyst reports I've read have priced in lower potash prices driven by Uralkali producing at full capacity. Since this is priced in, you get a free event option with the purchase of a POT share.

Well, maybe not exactly free since things can go from bad to worse. One thing that can go wrong is that the arrest of Uralkali's CEO may retard productive negotiations. However, the news sent potash names up over 2% on this news, so the market does not think arresting Uralkali's CEO is a net negative.

I personally believe that the upside events are much more abundant and likely than the downside events. Here are my thoughts on a few possible outcomes that will drive up potash prices (in some cases, even before prices are driven down):

Likely: Belarus and Russia will work something out, either forming another cartel with better governance or splitting the market after some intense negotiations.Maybe: Uralkali's CEO may get replaced to force a resolution.Likely: Uralkali's actual maximum capacity is only 12 million tonnes, not 14 million as stated by the CEO or 13 million as stated in ther investor presentation [pdf]. Maximum production won't impact global potash prices by as much as Uralkali says.Likely: Uralkali finds that it is extremely difficult to take market share away from its competitors and that increased volume does not make up for lower price. As a result, Uralkali reverts to the price-over-volume strategy, with or without Belaruskali.Highly unlikely, but cool to think about: Armed conflicts result between Russia and Belarus, and we later find out that the problems between the two countries are much bigger than potash (maybe because Putin is bitter about Lukasehnko's fish?).

A Side Note: Uralkali's CEO Is Neither a Smart nor Ethical Man

Uralkali's CEO, Baumgartner, is not as smart as he thinks he is. L! et me exp! lain. In a recent interview, Uralkai's CEO made a lot of big (negative) predictions about what will happen in the potash market as if he knows, and people are taking his words for it. However, he can't even predict the outcome of his meeting with the prime minster of a country that is run by a dictator, the same country that he just gave a big middle finger to.

Baumgartner, please repeat after me: "Potash accounts for 12% of Belarus's government revenue. Belarus is run by a dictator, a man who caught a bigger fish than Putin. You just screwed over Belarus. Given the circumstances, you shall not meet with Belarus' prime minster INSIDE Belarus."

Baumgartner, I strongly suspect, is not an ethical man either. I have two reasons for my belief:

Baumgartner denies that he has knowledge of the two extremely large insiders' trades that occurred prior to the announcement that he is breaking up the BPC cartel, an announcement that sent shares of publicly traded potash companies crashing. It would take more than a giant leap of faith to believe him.The abrupt way that Baumgartner announced the decision to break up the BPC cartel and the dire picture that he painted of the outcome of this action is not at all a responsible way to handle the situation - I simply cannot think of a worse way. His actions are a huge insult to all the small investors who are kept in the dark.

Conclusion

This article has put together many pieces of data and speculation. There are many moving pieces to be sure and the conclusion cannot be easily summarized (this entire article is a summary). However, taken together, I do believe that POT has a good risk-reward profile.

Please share your thoughts and let me know if you are interested in any related, follow-up articles. I would love to hear from you. Please leave your comments below or contact me through my website. Thanks for reading!

Source: Potash Corp: 5 Fundamental Reasons To Buy

Disclosure: I am long POT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)

Dow Dives 225 Points on Retail Chill

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The Dow Jones Industrial Average (DJINDICES: ^DJI  ) plummeted today, falling 225 points, or 1.5%, as investors worried that consumers were cutting back on their spending after disappointing reports by Wal-Mart (NYSE: WMT  ) and other retailers.

Reporting earnings this morning, Wal-Mart said it missed on both top and bottom lines, and lowered its full-year outlook. The world's largest retailer earned $1.24 per share, missing estimates by a $0.01, while revenue increased 2.4%, to $116.2 billion, below expectations of $118.1 billion. Same-store sales also fell at Wal-Mart's U.S. stores for the second quarter in a row, declining by 0.3%. That figure is closely watched because nearly 10% of non-automotive consumer spending in the U.S. takes place at Wal-Mart, and economists see it as a bellwether for the economy as a whole. The company blamed the slowdown on the payroll tax increase and higher gas prices, and it now expects a full-year sales increase of just 2%-3%, instead of the previously forecasted 5%-6%. It also cut its EPS forecast to $5.10-$5.30, from $5.20-$5.40, and shares finished down 2.6%.

Despite the sell-off, there was some good news today. Initial unemployment claims fell to a new six-year low, down to 320,000, better than estimates of 339,000. That also brought the four-week moving average to a near six-year low at 332,000, a sign that the labor market is steadily improving, which should help consumer spending. Elsewhere, the Empire State manufacturing report beat estimates, but the Philadelphia Fed's manufacturing index missed, though it still showed strong growth. Finally, the consumer price index edged 0.2% in July, matching projections, and homebuilder confidence jumped.

Wal-Mart wasn't the only Dow stock to slide today. Hewlett-Packard (NYSE: HPQ  ) shares finished down 4.5% as rival Lenovo, which recently replaced HP as the world's top PC seller, said it sold more smartphones and tablets than PCs in its recent quarter. Lenovo also saw just a 1.4% decline in computer shipments, compared to an 11% overall decline in the market, indicating that HP may have seen a steeper drop than expected. After hours, Dell, the No. 3 PC maker, reported that profits dropped 72%, and PC revenue fell 5%, as it faces many of the same challenges as HP. Hewlett-Packard will report earnings next Wednesday; analysts are expecting a per-share profit of $0.87.

Finally, Cisco Systems (NASDAQ: CSCO  ) shares ended down 7.2% after the networking leader said that it would lay off 4,000 employees. The news was surprising as it came on an otherwise solid earnings report, but CEO John Chambers said his company was still facing headwinds from the recovering economy.

Days like this are a a reminder of the beauty of dividend stocks. You get paid no matter what, and the dividend acts as a floor on the share price, because the yield goes up when the stock falls. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

Help for NFL Players Suddenly Rich or Suddenly Retired

The NFL Players Association announced Tuesday that it has expanded its four-year-old partnership with Financial Finesse, the retirement and financial education provider, with the launch of a Financial Helpline service that NFLPA members can use. 

In a webcast, Liz Davidson, founder and CEO of Financial Finesse (who also writes regularly for AdvisorOne) and Dana Hammond, director of player affairs and development for the NFL players union, spoke of the unique challenges faced by NFL players in managing their money, and the role that Financial Finesse has already played in educating players about not just the basics of money and investing, but also how to choose an advisor.

Hammond said that NFL players’ financial challenges starts with the fact that “We’re dealing with impressionable young men coming into the big NFL, playing out a lifelong dream.” However, “they’re often victims of financial advisors who are looking to separate them from their newfound wealth,” while “the requests they get from friends and family add to the pressures they’re feeling.”

In addition, players get only 17 paychecks a year, all paid out during the season, so the challenge for these players, Hammond says, is that “in that short time period, lots of money comes in quickly, and abruptly ends at the end of the season,” forcing the player to manage through the rest of the year. Then there’s the issue of whether the player will get “picked up for the next season,” and the overall short tenure of a professional football player’s career.

Davidson (left) pointed out that unlike most other working people, whose income tends to rise the longer they work, for NFL players, “so much of their wealth is up front; the reverse of most of us who gradually raise our salaries.” Moreover, Davidson says professional athletes also have to prepare for two retirements: from their playing careers and then when they stop working.

In 2009, the NFLPA retained Financial Finesse to help with its education program for current and retired NFL players. Hammond said the union knew it needed to help its players prepare for the likelihood of an owner’s lockout in 2011. “We sat down and put together a plan to address a crisis—players were facing a potential lockout in 2011, so we had two years for the players to save their money to prepare for the lockout, which could last an entire season.” A lockout would also affect the players’ health insurance coverage, a paramount consideration for people who make their living as athletes.

Hammond said that in addition to teaching players the importance of saving overall, and for the likelihood of losing their income during the lockout—urging players to “save 25% the first year, 25% the next year”—the NFLPA “wanted the guys to buy into this as leverage against the owners.”

The education program would have to take into account the youth of NFLPA’s current players, Hammond said. “We couldn’t do something text-heavy; it had to be user-friendly, and to be mindful of who we’re working with—players who have short attention spans.”

The program that Davidson and Financial Finesse put together played on the natural competitive nature of athletes, gave them anonymity so they could admit to ignorance of certain topics or having issues that they might be ashamed of, and used online contests and icons that provided education, and showed how far along the players were in preparing for the lockout. That was the Lockout Preparedness Score, which was displayed to the player after he answered 12 questions about his finances, and showed on a football-field graphic how close the individual was to full preparedness, shown as crossing the goal line.

Davidson said an important lesson for any financial educator, including advisors, is that you have to meet clients “where they are and take them where they need to be.” So for these young players, and for millennials in general, says Davidson, the education has to be interactive and use podcasts, videos, contests and social media to reach those clients “where they are.” Moreover, she says that “the learning style of players is kinesthetic, and contests sparked the competitive nature of players.”

So how well did the program work? Over the two years leading up to the lockout, 48% of the players reported that they saved at least 20% of their salaries each year. According to the executive director of the NFLPA, that financial preparation enabled players to “stand united in negotiations” with the owners.

Hammond pointed out that while more than 1,200 players — current and retired — have used the online financial education center set up by Financial Finesse, “ongoing usage is strong” as well. While the NFLPA started the program “for the lockout, the lockout is nothing more than a fire drill for when the paychecks finally end,” Hammond pointed out. With what they’ve learned from participants, Hammond said “we can use some of this as a transition tool; they’ll be engaged for a different reason,” using their increased knowledge and changed saving behaviors “to turn it into a wealth-building process.”

Davidson again related the NFLPA experience to that of advisors, for instance, to retirement plans. “You might bring in an educator for a specific event — a merger — so you have success metrics for that event, but then turn it into an ongoing program for individual crises. If they’re engaged, they’ll be more proactive.”

That’s where the new Financial Helpline rounds out services to the NFLPA. Current and retired players can call Financial Finesse’s CFPs on the phone, notes Hammond, “for a second opinion, or when they’re in a crisis, or for ongoing coaching.” Since those CFPs are salaried employees, the players know the education and counseling they get is unbiased; the Financial Finesse planners will never sell them a product.

Hammond argues that in addition to making the players more informed financial consumers, they can be educated about advisors themselves, so they know what to ask of advisors, which certifications to ask about, to be a “safety net” for players. The Hotline CFPs could also play a role in protecting those players from unscrupulous or fraudulent advisors.

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Check out these related stories on AdvisorOne:

Why Do Active Fund Managers Closet Index? It's in Their Interest$

A growing body of literature is exploring whether and when actively managed funds are worthwhile. The studies are based on the groundbreaking work of Antti Petajisto who found that active funds do beat passive indexes—if one separates the “closet index funds” that call themselves active managers.

In other words, Petajisto found that close to a third of mutual funds are active in name only but actually collect the higher fees of active funds while hugging their benchmarks such that they perform like low-cost index funds, only less well (because of the drag of their higher fees).

A further 20% of funds are officially index funds, leaving just half of retail funds as genuinely active funds. Of those, Petajisto found that the most active funds tended to generate significant alpha for investors.

Now, a new study by three finance professors seeks to locate active managers’ incentive for closet indexing.

Aron Gottesman and Matthew Morey of Pace University and Menahem Rosenberg of Touro College build on Petajisto’s findings but propose data which they argue revises the way we regard the manager’s incentive.

The researchers write:

“What is the incentive for active funds to closet index during down markets? According to Petajisto it is that underperforming the benchmark is particularly painful in a down markets when everyone is suffering losses, as opposed to an up market where the investors are still making money. Consequently a fund that underperforms in a down market will have lower net flows than a closet indexer. These losses in flows can cause the managers’ compensation to fall as it is often tied to size of the net assets of the fund, or worse, cause the manager to be fired. To avoid these consequences it is in the manager’s interest to closet index during down markets.”

But in examining 15 years of open, retail, actively managed, no-load funds from 1997 to 2011, Gottesman, Morey (left) and Rosenberg observed that shareholders did not penalize active managers in down markets. Rather, they found that shareholders direct their fund flows to high-performing funds in up markets and penalize poorly performing funds in up markets, but they tend to leave things be during down markets.

The authors write: “Thus, while we find results somewhat different from what Petajisto theorizes, it still makes sense for a manager to closet index during down markets as outperformance is not rewarded. Indeed, why work hard to beat the market in down markets when it does not matter much for subsequently [sic] flows?”

Gottesman, Morey and Rosenberg specifically offer two alternative explanations for the manager incentive to closet index.

The first is based on an insight from behavioral finance which finds that investors feel the pain of loss more acutely than the joy of gain. For that reason, they are reluctant to sell losers.

“This theory works for our results as investors do not respond in down markets to out- or underperformance with subsequent future flows,” they write.

A second rationalist explanation is that return dispersion is so great in down markets that investors attribute fund performance to luck rather than skill and consequently neither reward nor punish managers through subsequent fund flows.

In a phone interview with ThinkAdvisor, one of the study’s authors, Mathew Morey, said he preferred the behavioral explanation while leaving the matter unresolved until clarified by future research.

Asked why just 30% of funds rather than a larger proportion of the 80% of funds that are officially actively managed don’t resort to closet indexing, Morey thought integrity might have something to do with it.

“Maybe they have better corporate governance,” he said, adding that he would be interested in studying the relationship between active share (i.e., funds that vigorously seek alpha) and Morningstar’s fund stewardship ratings, which assess shareholder-friendly fund management.

Indeed, integrity is a core issue in Morey’s study, which points out that closet indexing involves deception (since the funds purport to be active); higher fees—generally 100 to 200 basis points higher than index funds; and crucially, a loss of benefit to shareholders since it is precisely during down markets that actively managed funds tend to beat their benchmarks.

Market Crash: 7 steps to keep in mind

The 'August' fall in the stock market still has many of us at the edge of our seats. With their wealth and dreams on the line, who wouldn�t be! And after the last US market crash during late 2007, all people want to do is keep their wealth safe. While this fall doesn�t seem as bad as the recession right now, many of us are already in a state of flux, unsure of what we should do.

Over the past few weeks, several people have been asking the same question

� �What should I do now?� Does one take their money out and start preparing for a market meltdown or should they stay put and continue investing? It has been observed that an overwhelming majority of people wanted to just stop investing and keep their money safe.

While 'protecting' your investment is the most natural thing to do, following up on your dreams and goals is also an important aspect of life itself. Realizing those dreams is what we live and earn for. And putting a halt to them is not the answer. Here are seven things you shouldn�t do when you find yourself in this situation:

Don�t proceed without planning: Things may seem bad at the moment, but pulling out of your investment without a second thought is as dangerous as self medication. If you do find yourself in such a situation, plan on how you would like to retreat your investments. Abruptly stopping all payments on the same, will not only cause disharmony in your money matters but also put an end to all your dreams.

Don�t panic: Panic is the most natural state of mind, when things go haywire. If you do find yourself in this situation, have a calm discussion about how you should proceed. Panicking will only cause more grievances and force you to make bad decisions.  An apt move to make at this point would be to speak openly to a certified financial planner who will be able to guide you in the best possible manner.

Don�t end your financial plan: Investing during times of financial crunch, especially for retirement, may sound unreasonable to many, but remember that this investment is being done for your future. If you are currently investing in a plan, try to continue the same instead of putting it to a complete halt. You can always rework your monthly investment to suit your financial needs.

Don�t get carried away with the market: The volatility of the market may scare you and your financial plans, but it is best not to be carried away by this fear.

Don�t get emotionally carried away if you see the market falling and avoid taking impulsive decisions. Keeping your money safe is the key.

Don�t be influenced by short term losses: The term loss itself will set of various alarms in your head. If you find your investments and stock options under this position, try not to get ahead of yourself. If you have used a particular tool for a long term plan, then these losses would not affect very heavily on your plans or your investments.
 
Do not ignore the importance of family in financial decisions: The breadwinner of the family is usually the one to make decisions. However, it is important that you keep your family in the loop of the current situations, as it is also their financial future that depends on this. You may not be able to change the outcome of the markets, but you can keep your family�s future safe.

Don�t give up: One cannot stress on this enough. You cannot give up on the idea of having a financially secure future, just because the present situation seems murky. Remember to always have a contingency plan that will help you during such situations. This would ensure that your present and your future safety are withheld. This situation will pass, and all you need to remember is that there are people who can guide you and support you in times of financial turmoil.

While it�s easier said than done you can protect your own future through these simple methods. All you need to do is just keep the faith. 

Mecklai graph of the day: Widening Spanish - German Spreads

Spanish bonds have declined quite sharply since the past several days and the previous session was no exception either, as spread between the 10-year Spanish yields relative to benchmark German bunds widened the most since the Euro was created. The yield spread against 10-year German bunds widened to more than 500 basis points, a record high, as concerns grew that Spain's lenders will need additional financial support to weather Europe's debt crisis. Meanwhile, global risk aversion is pushing the German bunds to a record low, which in turn is adding more pressure on the yield spread to widen.

As long as the ongoing banking concerns in Spain persists, Spanish government securities are likely to continue weakening further while demand for the safest assets such as German bunds would pick up. This in turn could lead to further increase in spread between the securities of Euro zone's largest and 4th largest economy.

The below graph shows the spread of Spanish 10-year bond over German bund for the last 3 months

 

 

 

 

 

 

 

 

 

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click here

Infosys Hints At What It Can Do

Once a growth darling and a play on the rise of outsourcing, Infosys (Nasdaq:INFY) has had a rougher go of it over the past few years an strategic missteps compromised the company's growth and market share. More recently, investors have cheered the return of NR Narayana Murthy to the company as executive chairman and the vision he laid out for a return to success based around improving employee morale/performance and better appreciating the actual needs of customers.

It's much too soon for any of that to make a major difference, but Infosys's strong first fiscal quarter results are a positive step all the same. If nothing else, it does show that the company is not so far behind that it can't still win deals and deliver good results. While the shares have already bounced about 20% off of a recent low, a fair value in the mid-$50s gives investors a reason to hang on for a little while longer.

Surprising Fiscal First Quarter Results
Infosys surprised the Street with its fiscal first quarter numbers, and for once it was a positive surprise as the company saw solid wins and client additions, good volume, and stability in margins.

Revenue rose 17% as reported in rupees, or about 14% as reported in dollars. Volume increased about 4% on a sequential basis (against 8% overall sequential revenue growth), and the company added 66 new clients (bringing the total of active clients to 836). Not unlike Accenture (NYSE:ACN), growth was strong in the U.S., with a 5% sequential improvement, and the financial services and manufacturing verticals both showed sequential growth.

SEE: 5 Earnings Season Investing Tips

Margin improvement is still a work in progress. Gross margin fell more than four points from last year, but stayed flat on a sequential basis. Operating earnings fell 1% in rupees and 4% in U.S. dollars, but both figures were up sequentially (8% and 2%).

Outsourcing Good, Higher-Value Consulting Maybe Not So Good
While the reaction to Infosys's results has been considerably more positive than the reaction to Accenture's, the underlying trends do seem consistent. Outsourcing was the stronger business for Accenture in its fiscal third quarter (ended May), with revenue up 7% in constant currency against the flat consulting business. Likewise, outsourcing bookings were quite strong while consulting was weak.

All things considered, then, this should be an encouraging number for Infosys peers like Cognizant (Nasdaq:CTSH) and Tata. I'm not quite so sure what this says for companies like IBM (NYSE: IBM), Xerox (NYSE:XRX), and Computer Sciences (NYSE:CSC). Odds are that there is still pressure in the higher-value, faster-turning consulting sectors, and that could lead to another mixed result for IBM.

Can Infosys Change Enough To Be A Leader Again?
Much as investors were pleased to see the return of Mr. Murthy, I have my doubts about the long-term benefits of the move. The history of former leaders returning to their post is spotty – for every Apple (Nasdaq:AAPL) success story, there are at least two Dell (Nasdaq:DELL) stories where the second coming disappoints.

That said, the plan laid out recently at the annual shareholder meeting is a credible one. An immediate wage hike for employees should improve morale and reduce attrition of quality workers, and that should ultimately be good for margins (paying them more hurts margins, but having to constantly higher and train new workers hurts even more). Likewise, approaching clients to figure out how they can better serve their needs is a common sense move that should pay off in better retention.

Even so, there are reasons to be skeptical. IBM and Accenture have largely cloned Infosys's offshore leverage and rivals like Tata and Cognizant outmaneuvered Infosys in markets like remote infrastructure management. So even if Mr. Murthy's ideas are sound, the history of turnarounds in the IT services space is spotty at best, and this isn't a market like the consumer market where a few clever product introductions (like the iPod/iPhone) can make a big difference right away.

SEE: A Look At Corporate Profit Margins

The Bottom Line
I was positive on Infosys three months ago (with some caveats), and I still am. I believe the company can produce long-term growth around 10%, and that's good for a price target in the $50s. My concern, though, is that the company's decision to go elephant hunting (that is, targeting large deals) is going to lead to a lot of quarter-to-quarter volatility, and I think there's a reasonable chance Infosys will stumble in the next quarter or two. Even so, for investors who can live with some ups and downs along the way, I think these shares still offer reasonable potential.

Bull of the Day: Ruckus Wireless (RKUS) - Bull of the Day

Ruckus Wireless (RKUS) didn't make enough noise when it came public, and the noise it has created at earnings hasn't exactly been music to investors ears. Still, it is a Zacks Rank #2 (Buy). It is the Bull of the Day.

Making a Connection

Recently, analysts are both Deutsche Bank and William Blair noted that the WLAN space was seeing some positive purchasing trends. The idea of constrained IT budgets did not come up nor did customers waiting for the latest and greatest technology.

With the way things are going, investors who are looking at the long term might even see a budget flush at the end of this year. The budget flush happens when a business manager spends all available budget all at once to make sure that next year they get an equal amount of budget or more depending on success.

Company Description

Ruckus Wireless provides Wi-Fi solutions. The company offers SmartCell Gateway, a platform to support and manage its Smart Wi-Fi access points as well as for the integration of Wi-Fi and other services into service provider network infrastructure. The company was incorporated in 2002 and is headquartered in Sunnyvale, California.

Earnings History

Looking to the earnings history, we have a limited data set with only two reports. Worse than having limited data is when they are both misses!

The most recent quarter was expected to show a gain of $0.03, but was instead a break even quarter. That miss of $0.03 helped push the stock lower by 22% in the session following the earnings release.IPO Had Access Denied

Not too long ago, RKUS came public and had a major flop of an IPO. The stock was offered at $15 and raised $126 million for the company, but closed down 18% to $12.25 on its first day of trading. Since then, the stock seemed to have a stronger signal for investors.

The stock ran to highs of $26 and change before losing the signal again with investors. Now back in the low teens, many are banking on a strong second half for the telc! o and telco equipment providers to boost shares back to all-time highs.

Earnings Estimates Adjusted

After its recent IPO analysts have had a chance to fine tune their estimates. The 2013 Zacks Consensus has been trimmed from $0.16 to a nickel. At the same time the 2014 Zacks Consensus Estimate has dropped from $0.30 in January of this year to the current level of $0.16.

Analysts often have trouble with a new company that does not have a full year of data available to discern trends. This is likely the case for RKUS, but the new, lower bar means the company has a much better chance of beating the number.

Valuation

The valuation picture for RKUS is a stiff one. This is often the case for a stock that is fresh off an IPO with only two quarters behind it. With minimal earnings at present the 45x trailing PE doesn't seem to really be a fair comparison to the 12x industry average. Similarly, a 304x forward PE seems to be more of a data error than a basis for an investment decision. At the same time, a 250% growth in earnings from 2013 to 2014 works to level the absurd PE ratios.

The Chart

The chart on this stock is one that doesn't scream a Zacks Rank #2 (Buy). Instead it looks like one of those stocks that got ahead of itself and has later corrected. Taking advantage of the correction is one thing that I suggest investors look into as the stock bottomed in June and is on the rise. I am very positive on the whole telco equipment space after companies like GOOG and MSFT recently missed earnings. The likelihood of a flood of wearable devices coming in 4Q is pretty high, and all of them will need wireless connections... and playing a basket of wireless equipment stocks makes a lot of sense right here.

Brian Bolan is a Stock Strategist for Zacks.com. He is the Editor in charge of the Zacks Home Run Investor service, ! a Buy and! Hold service where he recommends the stocks in the portfolio.

Brian is also the editor of Breakout Growth Trader a trading service that focuses on small cap stocks and also carries a risk limiting strategy. Subscribers get daily emails along with buy, and sell alerts.

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Citi Trends Held at Underperform - Analyst Blog

On Jul 8, 2013, we reiterated our long-term recommendation on Citi Trends Inc. (CTRN) at Underperform with a target price of $14.00, based on the sluggish macroeconomic environment.

Why the Reiteration?

Operating in the consumer-driven retail industry, we believe Citi Trends remains significantly impacted by the macroeconomic issues, wherein its customers continue to feel the pinch of increased payroll tax, higher fuel prices, high unemployment rate and delayed tax refunds.

Moreover, the seasonal nature of the company's business exposes it to significant risks if the seasons fail to deliver the expected operating performance.

Additionally, the highly fragmented specialty retail sector compels Citi Trends to compete with larger off-price rivals, mass merchants as well as smaller specialty retailers on the basis of fashion, quality and service. To retain its existing market share, the company may have to reduce its sales prices, which could affect its margins.

These have been reflected in Citi Trends' performance as it saw negative earnings surprise for first-quarter fiscal 2013. The company reported first-quarter fiscal 2013 earnings per share of 42 cents, missing the Zacks Consensus Estimate of 57 cents and down 39.1% from 69 cents earned in the year-ago quarter.

Consequently, over the last 60 days, the Zacks Consensus Estimate for fiscal 2013 has moved down to a loss of 3 cents per share from a profit of 6 cents per share. Similarly, the Zacks Consensus Estimate of loss of 47 cents for the second quarter widened by a penny over the same time frame.

However, prudent steps taken by Citi Trends such as store expansion strategy as well as endeavors to reduce inventory shrinkage can steadily improve the operational performance of this Zacks Rank #3 (Hold) stock in the future. Nevertheless, we believe that amid the absence of near-term growth catalysts and persistent unsettling economic issues, Citi Trends' performance is likely to remain strained ! in the near future.

Other Stocks to be Considered

Besides Citi Trends, other retail stocks worth a look include The Gap, Inc. (GPS), Lululemon Athletics Inc. (LULU) and Foot Locker, Inc. (FL). All these carry a Zacks Rank #2 (Buy).

Save yourself from fraudulent Chit Fund Investments

Sarita and her husband Shiva earn an income by working as a maid and a driver in the Vijayawada district of Andhra Pradesh. They invest a part of their income in the Dhanarashi Chit fund that is run by a local jeweller. When the first meeting was called for the auction of the fund, Sarita and her husband did not participate and chose to wait for better returns.

However, by the time Sarita was ready to bid, the jewellery shop was busted and the owners were caught by the police for fraudulent transactions. The police assured Sarita and other investors of the fund that their money would be returned; however, it's been over a year and they have still not received any news.

What are Chit Funds?

Chit funds are indigenous saving mechanism that is unorganised and run between friends, families and known persons. Chit funds are easy to join as there is very little paperwork to be submitted and the entire set up is based on trust.

They have been around for over 1000 years and are present in other countries too where they are popularly known as Rotating Savings and Credit Associations.

How do they function?

Suppose a group of 65 members come together and contribute Rs. 3,000 every month for 65 months. The corpus will collect Rs. 1, 95,000 in the first instalment. Every month, an auction will be held in which the members are allowed to bid for the chit fund amount collected that month and the person offering the lowest bid will be awarded the bid.

The bid will begin at a minimum discount of 5 percent (foreman/fund administrator's commission) and can go up to a maximum of 40 percent. Suppose the winning bidder is willing to offer a discount of 35 percent in the first month, then, she will get Rs 1,26,750.

The discount amount of Rs. 68,250 minus the 5 percent commission to the foreman will be distributed as dividend amongst all the members.

So, once the foreman is paid Rs 3,412.50 as commission, the balance amount of Rs 64,837.50 is distributed among the 65 members and each member is entitled to Rs 997.50 as dividend.

The dividend amount is adjusted with the next month's instalment to be paid by the members and hence the next instalment contributed will be Rs. 2002.50. 

The winner of the bid, also known as the "prized member" will have to continue contributing to the chit fund for all 65 months even though they are not allowed to bid again.

The members who wait till the end for lower discounts will be the ones who really make a profit in the fund. The returns are not assured as it depends largely on the bidding interest.

Why are they Popular?

Chit funds are one of the most popular investment vehicles in the country even though it is unregulated and the entire set up is built on trust. Small businessmen and low income group individuals can avail funds on time at nominal rates through bids.

Individuals who bid early in the chit funds do not earn any returns and end up paying an "effective" interest to avail the funds on an urgent basis.
It is difficult to assess the profit or loss a person makes from chit funds as the outcome is largely dependent on the bid results.

Often, persons who have bid early have been able to avail funds at lower rates than what they would have had to pay the bank on availing a loan.

Regulation

A Chit Fund Act, 1982, has been framed to regulate and control chit fund operation by various state governments, but unorganised chit funds are rampant in the country.

Since the chit fund need to deposit 100 percent value of the "pot" with the registrar of Chits prior to commencement of the chit scheme, small funds do not register themselves as then they will have to forego the auction for the first month as the foreman is paid the first month's fund to compensate him/her for the deposit made.

Different Types of Frauds

Chit fund frauds have become a major issue and happen for various reasons, such as:

• The foreman/fund manager disappears with the corpus amount.

• A member could default in instalment payment or disappear after winning the first bid.

• The discount rate might be rigged and a desperate member might end up paying a higher discount.

It is advisable to invest only in registered chit funds that have completed many chit funds in the past. The Ministry of Corporate Affairs has an exhaustive list of registered chit funds; however, many chit funds get unlisted, so do your research before investing. 

Secondly, only invest in a chit fund if you are confident that you will be able to complete all the instalments or you might end up paying a penalty. 

Considering the risks, it is inadvisable to invest in chit funds, but if you intend to join one, do your homework thoroughly as  there is very little scope of recovery in case of a scam.

    

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Is Higher Education Still A Good Investment?

While the opportunity to pursue a course of higher education was once a fundamental part of the American Dream, it is now a trail fraught with risk and cumulative debt. Collectively, graduates in the U.S. currently carry $1 trillion in student debt, which is hindering their ability to establish businesses, create job opportunities and take their first steps on the property ladder. While some may consider rising levels of student debt to be an inevitable consequence of the global recession, subsequent education cuts are only serving to exacerbate the situation.

According to research conducted by the Center on Budget and Policy Priorities in 2012, 26 states were set to slash spending during the current fiscal year, while 35 local authorities continue to invest at a lower rate than before the recession. At the same time, college fees continue to rise at a faster rate than inflation, meaning that students are effectively investing in inferior educations that can no longer guarantee employment or a suitable level of future remuneration.

Higher Education and the Job Market
The combination of soaring tuition fees, diminishing employment prospects and reduced government spending has changed the face of higher education in the U.S. and left many questioning whether it still represents a sound financial investment. The fact remains that students pursue higher education in order to gain specific academic qualifications, which in turn ensures that they are employable within their chosen fields. As the U.S. job market continues to sustain a weak and sluggish recovery, parents and aspiring graduates are reluctant to invest in education that is unlikely to secure financial and professional security.

The U.S. economy created 175,000 jobs during May 2013, and while the unemployment rate increased slightly to 7.6%, this still represents a significant improvement on the corresponding figures from last year. These statistics are misleading, however, as they distort the weakest labor market recovery since World War II. Essentially, the majority of job opportunities that are being created deliver less than living wages. A recent report by public policy group Demos suggests that various forms of government investment in the private sector have created nearly two million jobs that pay just $12 an hour or less.

The Changing Nature of the Job Market and the Ability of Students to Capitalize
Thanks to numerous technological and social advancements, the nature of the workplace has changed considerably since the turn of the century. This has led to a rise in the number of self-employed citizens and freelancers, with approximately one-third of the U.S. workforce now operating independently. A look at the demographics behind these figures suggest that while self-employment has risen by 24% among individuals aged 65 and over since 2010, it has fallen by 19% among those who are 25 and under during the same period.

While some may argue that this statistic is simply reflective of the fact that formal education lends itself to the traditional employment market, it also suggests that the burden of student debt is weighing heavily on graduates. The share of 25 year olds carrying student debt has risen by 18% since 2003, and along with the rising cost of tuition, this offers an insight into the issues facing graduates nationwide. More specifically, the sheer weight of student debt is placing huge constraints on students once they have qualified for a loan, especially in terms of their ability to take risks and establish a business venture.

Living the American Dream: Can Students Afford the Trappings of Adulthood?
While the effects of economic stagnation are not reserved solely for graduates, there is an interesting contrast between the levels of student and consumer debt. While U.S. citizens have held total consumer debt to a respectable 9% increase since 2004, student debt has more than tripled to approximately $1 trillion during the same period. This underlines the severity of the financial issues facing those who have pursued higher education, and hints at their relative inability to reinvest money into the economy.

As graduates continue to grapple with a sluggish job market and soaring debt levels, they are unable to invest in the trappings of adulthood and contribute towards a sustainable economic growth. Given that the college enrollment rate among high school graduates has risen steadily since 1959 and reached a high of 70.1% as recently as 2009, this leaves a potentially vast demographic of citizens who are unable to purchase houses, cars or invest in their long-term financial futures. In addition to creating a generation of adults who are unable to fulfil the American Dream and achieve their full potential, the implications for a long-term economic recovery are also extremely worrisome.

The Bottom Line
Placing the economic implications of post-secondary education to one side, however, the steadily rising college enrollment rate proves that many individuals still believe in higher education as a sound investment opportunity. While it is unclear whether this is the result of enduring faith in the education system or a failure to appreciate the changing nature of the economy and its workplaces, it cannot be denied that rising tuition fees and an ailing job market continue to perpetuate a cycle of spiralling student debt and lost opportunities. Unless this can be addressed, higher education will continue to represent an increasingly risky and uncertain investment in the years to come.

Is Abbott a Good Defensive Play?

With shares of Abbott Laboratories (NYSE:ABT) trading at around $36.89, is ABT an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock's Movement

Abbott was given an OUTPERFORM rating here on April 2. It has had a good run since, but have circumstances changed?

Abbott operates in four segments: Nutritionals, Medical Devices, Diagnostics, and Established Pharmaceuticals. The biggest selling point for Abbott is an aging population – not just in the United States, but in emerging markets as well. But will that be enough in a difficult economic environment? Let's take a look at some positives and negatives:

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

Positives:

Highly innovative company Analysts like the stock: 8 Buy, 14 Hold, 1 Sell Established Pharmaceutical sales increased 4.4 percent y-o-y in emerging markets Management expects Established Pharmaceutical sales to grow in double-digits in 2013 Nutritional sales increased 8.7 percent y-o-y Diagnostic sales increased 4.4 percent y-o-y Stock should be resilient in weak markets 1.50 percent dividend yield (lower than peers) FDA approval for TECNIS Toric 1-Piece Intraocular Lens

Negatives:

Foreign exchange rates hurting bottom line Weak sales in Europe and Japan Medical Device sales declined 4.6 percent y-o-y

The chart below compares fundamentals for Abbott, Medtronic (NYSE:MDT), and CryoLife Inc. (NYSE:CRY). Abbott has a market cap of $58.20 billion, Medtronic has a market cap of $47.65 billion, and CryoLife has a market cap of $158.85 million.

	ABT	MDT	CRY
Trailing   P/E	11.29	13.90	20.42
Forward   P/E	16.47	12.21	14.82
Profit   Margin	13.17%	21.24%	6.03%
ROE	N/A	19.35%	6.37%
Operating   Cash Flow	N/A	$4.74 Billion	$18.99 Million
Dividend   Yield	1.50%	2.20%	1.70%
Short   Position	0.90%	1.00%	1.90%

 

Let's take a look at some more important numbers prior to forming an opinion on this stock.

E = Equity to Debt Ratio Is Normal

The debt-to-equity ratio for Abbott is weaker than the industry average, but it still qualifies as normal.

	Debt-To-Equity	Cash	Long-Term Debt
ABT	0.76	$15.17 Billion	$20.48 Billion
MDT	0.64	$2.46 Billion	$11.49 Billion
CRY	0.00	$13.01 Million	$0

 

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

T = Technicals Are Strong   

Abbott hasn't been around long on its own, but the performance year-to-date has been good. In a normal market, it would be considered a great performance. In the current market environment, it's seen as ho-hum.

	1 Month	Year-To-Date	1 Year	3 Year
ABT	4.84%	18.65%	28.22%	80.74%
MDT	-0.11%	14.35%	25.12%	15.14%
CRY	-5.82%	-8.77%	8.35%	N/A

 

At $36.89, Abbott is trading above all its averages.

50-Day   SMA	35.35
100-Day   SMA	34.03
200-Day   SMA	32.93

 

E = Earnings Have Been Steady               

Earnings have been steady on an annual basis, but it's a different company now. Keep that in mind when looking at the numbers below.

	2008	2009	2010	2011	2012
Revenue   ($)in   billions	29.53	30.76	35.17	38.85	39.87
Diluted   EPS ($)	3.12	3.69	2.96	3.01	3.72

 

When we look at the previous quarter on a year-over-year basis, we see a decline in revenue and earnings, but these numbers as a whole don't reflect the current situation. Once again, it's not the same company after the spinoff.

	3/2012	6/2012	9/2012	12/2012	3/2013
Revenue   ($)in   billions	9.46	9.81	9.77	10.84	5.38
Diluted   EPS ($)	0.78	1.08	1.21	0.66	0.34

 

Now let's take a look at the next page for the Trends and Conclusion. Is this stock an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY?

T = Trends Support the Industry

With baby boomers retiring in droves, the industry stands to benefit. Income-oriented stocks have also been hot. This doesn't mean the industry is bulletproof by any means, but it should be more resilient than most industries when the stock market eventually comes back down to reality.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

Conclusion

Abbott is an innovative, diversified, and well-managed company with a decent dividend. That combination is difficult to find.

Weak Employment Data Sinks Stock Markets

In a rare move, every Dow Jones Industrial Average (DJINDICES: ^DJI  ) stock is losing value today, and the index itself has lost 1.4% of its value near the end of the trading session. The broader S&P 500 (SNPINDEX: ^GSPC  ) is off 1.36% today as investors weigh the Federal Reserve's next move and weakening economic data.

ADP released its private-sector employment survey results, which showed a 135,000 increase in the number of jobs in May. That fell below forecasts of 170,000 , casting a shadow on the Department of Labor's results due out on Friday. It was also worrisome that a reading of hourly compensation fell 3.8%, putting even more pressure on U.S. workers.

The Fed didn't help matters by saying the U.S. economy is growing at a "modest to moderate" pace. Investors are left to guess what the Fed's next move is, and with unemployment weak, inflation low, and manufacturing slowing, I'd bet that stimulus is the answer. 

After being one of the best performers on the Dow over the past few days, Intel (NASDAQ: INTC  ) is one of the biggest losers today, falling 2.4%. Analysts at JPMorgan warned that lower PC sales could hurt results in the second quarter, causing the company to miss expectations. 

That could well be true, but long-term investors should be focusing on the company's Galaxy Tab 3 win and the upcoming Broadwell chip as great signs for the company. Intel is finally gaining traction in the mobile market, and that should help the company grow over the next few years.

When it comes to dominating markets, it doesn't get much better than Intel's position in the PC microprocessor arena. However, that market is maturing, and Intel must find new avenues for growth. In this premium research report on Intel, a Motley Fool analyst runs through all of the key topics investors should understand about the chip giant. Click here now to learn more.

Intel's usual partner, Microsoft (NASDAQ: MSFT  ) , is down 0.9% today after unveiling an update to its main operating system. The update, dubbed Windows 8.1, incorporates user feedback, including the return of the "Start" Button. The update won't be available until later this year, and I wouldn't expect it to goose sales for the software giant. What will be more important is gaining share in mobile, where Microsoft is starting to gain some traction, though it still plays a distant third fiddle to Apple and Google. 

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More Expert Advice from The Motley Fool

The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock in our brand-new free report: "The Motley Fool's Top Stock for 2013." I invite you to take a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.

Risks and Water Scarcity Worry Many Energy Companies

While advances in drilling technology have allowed us to unlock vast quantities of natural resources around the world, a Royal Dutch Shell (NYSE: RDS-A  ) executive sees the energy sector needing more than just new technology to meet its current and upcoming challenges. From technology transfer to sharing the risk for new exploration through joint ventures, several companies are already tackling these challenges head on. 

One of the most pressing issues that new drilling technology faces is the use of water in its wells. In this video, Fool.com contributor Tyler Crowe talks with Aimee Duffy and looks at how important water is to the fate of drilling and what companies are hoping to make a difference with this issue. 

Whenever there is a challenge facing the oil and gas industry, almost every time you'll hear that Hailliburton is working on a solution. Investors would be wise to consider Halliburton, one of the top companies in the business and one of those most in tune with the market. To access The Motley Fool's new premium research report on this industry stalwart, simply click here now and learn everything you need to know about how Halliburton is positioning itself both at home and abroad.

Top Insurance Companies To Buy For 2014

Completing its acquisition of�Alterra Capital Holdings, Markel Corporation (NYSE: MKL  ) now has about $23 billion in combined assets, and $6 billion in shareholder equity.�

In the company's press release, Markel's Chairman and Chief Executive Officer Alan Kirshner provided customers and investors a broader view of the deal: "The combination of Alterra with�Markel�will create a strong company in global specialty insurance and investments, with a demonstrated track record of underwriting discipline in niche market segments and proven asset management strengths that should benefit all our stakeholders."

Specifically, Markel is interested in Alterra's underwriting, claims, and support teams to help Markel expand its product offerings and geographic reach. To put it another way -- greater underwriting depth gives Markel a greater financial scale.�

Top Insurance Companies To Buy For 2014: Genworth Financial Inc (GNW)

Genworth Financial, Inc., a financial security company, provides insurance, wealth management, investment, and financial solutions in the United States and internationally. The company offers various insurance and fixed annuity products, including life and long-term care insurance products; payment protection insurance products for consumers primarily to meet specified payment obligations; and wealth management products, such as managed account programs with advisor support and financial planning services. It also provides mortgage insurance products and related services to insure prime-based, individually underwritten residential mortgage loans or flow mortgage insurance; and mortgage insurance on a structured or bulk basis, as well as offers services, analytical tools, and technology that enable lenders to operate and manage risk. In addition, the company provides institutional products consisting of funding agreements, funding agreements backing notes, and guaranteed in vestment contracts. Genworth Financial, Inc. distributes its products and services through financial intermediaries, advisors, independent distributors, affinity groups, and sales specialists. The company was founded in 2003 and is headquartered in Richmond, Virginia.

Top Insurance Companies To Buy For 2014: Unum Group(UNM)

Unum Group, together with its subsidiaries, provides group and individual disability insurance products primarily in the United States and the United Kingdom. It also provides a portfolio of other insurance products, including employer-and employee-paid group benefits, life insurance, long-term care insurance, and related services. Its products include group long-term and short-term disability; group life and accidental death, and dismemberment; individual disability; group long-term care; voluntary benefits; group life; accident, sickness, and disability; and cancer and critical illness insurance products. The company also provides individual life and corporate-owned life insurance, reinsurance pools and management operations, group pension, health insurance, and individual annuities. Unum Group markets its products primarily to employers interested in providing benefits to their employees. The company sells its products through field sales personnel, independent brokers, consultants, and agency sales force. Unum Group was founded in 1848 and is based in Chattanooga, Tennessee.

Top Small Cap Companies For 2014: Cincinnati Financial Corporation(CINF)

Cincinnati Financial Corporation engages in the property casualty insurance business in the United States. Its Commercial Lines Property Casualty Insurance segment provides coverage for commercial casualty, commercial property, commercial auto, and workers? compensation. It also offers specialty packages, including coverages for property, liability, and business interruption for specific industry classes, such as artisan contractors, dentists, or street businesses. In addition, this segment provides contract and commercial surety bonds, fidelity bonds, and director and officer liability insurance, as well as machinery and equipment coverage. The company?s Personal Lines Property Casualty Insurance segment offers coverage for personal auto and homeowners, as well as other insurance products, such as dwelling fire, inland marine, personal umbrella liability, and watercraft coverages to individuals. Cincinnati Financial?s Excess and Surplus Lines Property Casualty Insurance s egment offers commercial casualty insurance that covers businesses for third-party liability from accidents occurring on their premises or arising out of their operations, including products and completed operations; and commercial property insurance, which insures loss or damage to buildings, inventory, equipment, and business income from causes of loss, such as fire, wind, hail, water, theft, and vandalism. The company?s Life Insurance segment provides term insurance; universal life insurance; whole life insurance; and worksite products, which include term, whole life, universal life, and disability insurance offered to employees through their employer. This segment also markets disability income insurance, deferred annuities, and immediate annuities. Its Investment segment invests in fixed-maturity investments, equity investments, and short-term investments. Cincinnati also offers commercial leasing and financing services. The company was founded in 1950 and is headquarte red in Fairfield, Ohio.

Top Insurance Companies To Buy For 2014: Prudential Financial Inc.(PRU)

Prudential Financial, Inc., through its subsidiaries, offers various financial products and services in the United States, Asia, Europe, and Latin America. The company operates through three divisions: The U.S. Retirement Solutions and Investment Management, The U.S. Individual Life and Group Insurance, and The International Insurance and Investments. The U.S. Retirement Solutions and Investment Management division provides individual variable and fixed annuity products, as well as offers retirement investment and income products and services to retirement plan sponsors in the public, private, and not-for-profit sectors. This division also provides investment management and advisory services to the public and private marketplace. The U.S. Individual Life and Group Insurance division offers individual variable life, term life, and universal life insurance products; and group life, long-term and short-term group disability, long-term care, and group corporate-, bank-and trus t-owned life insurance products to institutional clients. This division also sells accidental death and dismemberment, and other ancillary coverages, as well as provides plan administrative services; and offers preferred provider and indemnity dental coverage plans to clients. The International Insurance and Investments division provides international individual life insurance products in Japan, Korea, and other foreign countries; and offers proprietary and non-proprietary asset management, investment advice, and services to retail and institutional clients internationally. In addition, the company engages in real estate brokerage franchise business, which involves marketing its franchises to the real estate companies. Further, it provides institutional clients and government agencies with various services in connection with the relocation of their employees. Prudential Financial, Inc. was founded in 1875 and is headquartered in Newark, New Jersey.

Advisors' Opinion:

• [By Matthew Scott]

  Retiring Baby Boomers could make Prudential Financial (NYSE: PRU) a strong performer for years to come. Insurance products like its line of guaranteed income annuities have given it an edge over rivals and it continues to make inroads into other areas of investing. Prudential’s stock price increased more than five times over the last two years, jumping from $11.20 on March 9, 2009 to $61.58 at the end of the first quarter.

Top Insurance Companies To Buy For 2014: Old Republic International Corporation(ORI)

Old Republic International Corporation, through its subsidiaries, provides various insurance and mortgage guaranty products in North America. The company operates in three segments: General Insurance, Mortgage Guaranty, and Title Insurance. The General Insurance segment provides liability insurance coverages to businesses, government, and other institutions in commercial construction, forest products, energy, general manufacturing, and financial services industries; and transportation, including trucking and general aviation industries. It provides various insurance products, such as automobile extended warranty, aviation, commercial automobile insurance, general liability, home warranty, inland marine, travel accident, and workers? compensation, as well as liability coverage for claims arising from the acts of owners or employees, and protection for the physical assets of businesses. This segment also offers financial indemnity products, such as consumer credit indemnity , errors and omissions/directors and officers, guaranteed asset protection, and surety, as well as bonds that cover the exposures for losses of monies, or debt and equity securities due to acts of employee dishonesty. The Mortgage Guaranty segment insures first mortgage loans, primarily on residential properties incorporating one-to-four family dwelling units to mortgage bankers, brokers, commercial banks, and savings institutions. The Title Insurance segment provides lenders' and owners' title insurance policies to real estate purchasers and investors based upon searches of the public records. It also provides escrow closing and construction disbursement services; and real estate information products, national default management services, and services related to real estate transfers and loan transactions. Old Republic International Corporation markets its products directly, as well as through insurance agents and brokers. The company was founded in 1887 and is based in Chi cago, Illinois.

Top Insurance Companies To Buy For 2014: Berkshire Hathaway Inc (BRK.B)

Berkshire Hathaway Inc. (Berkshire) is a holding company owning subsidiaries engaged in a number of diverse business activities. The Company is engaged in insurance businesses conducted on both a primary basis and a reinsurance basis. Berkshire also owns and operates a number of other businesses engaged in a variety of activities. On December 30, 2011, Medical Protective Corporation (MedPro) completed the acquisition of 100% of the Princeton Insurance Company, a professional liability insurer for healthcare providers based in Princeton, New Jersey. During the year ended December 31, 2011, Acme Building Brands (Acme) acquired the assets of Jenkins Brick Company, the brick manufacturer in Alabama. In September 2011, Berkshire acquired The Lubrizol Corporation (Lubrizol). In June 2011, the Company acquired Wesco Financial Corporation. In June 2012, Media General, Inc. sold 63 daily and weekly newspapers to World Media Enterprises, Inc., a subsidiary of Berkshire. In July 2012, Berkshire�� The Lubrizol Corporation acquired Lipotec SA.

Insurance and Reinsurance Businesses

Berkshire�� insurance and reinsurance business activities are conducted through numerous domestic and foreign-based insurance entities. Berkshire�� insurance businesses provide insurance and reinsurance of property and casualty risks world-wide and also reinsure life, accident and health risks world-wide. Berkshire�� insurance underwriting operations are consisted of the sub-groups, including GEICO and its subsidiaries, General Re and its subsidiaries, Berkshire Hathaway Reinsurance Group and Berkshire Hathaway Primary Group. GEICO insurance subsidiaries include Government Employees Insurance Company, GEICO General Insurance Company, GEICO Indemnity Company and GEICO Casualty Company. These companies primarily offers private passenger automobile insurance to individuals in all 50 states and the District of Columbia. In addition, GEICO insures motorcycles, all-terrain vehicles, recreational vehicles and s! mall commercial fleets and acts as an agent for other insurers who offer homeowners, boat and life insurance to individuals. GEICO markets its policies primarily through direct response methods in which applications for insurance are submitted directly to the companies through the Internet or by telephone.

General Re Corporation (General Re) is the holding company of General Reinsurance Corporation (GRC) and its subsidiaries and affiliates. GRC�� subsidiaries include General Reinsurance AG, a international reinsurer based in Germany. General Re subsidiaries conduct business activities globally in 51 cities and provide insurance and reinsurance coverages throughout the world. General Re provides property/casualty insurance and reinsurance, life/health reinsurance and other reinsurance intermediary and risk management, underwriting management and investment management services.

Property/Casualty Reinsurance

General Re�� property/casualty reinsurance business in North America is conducted through GRC. Property/casualty operations in North America are also conducted through 16 branch offices in the United States and Canada. Reinsurance activities are marketed directly to clients without involving a broker or intermediary. General Re�� property/casualty business in North America also includes specialty insurers (primarily the General Star and Genesis companies domiciled in Connecticut and Ohio). These specialty insurers underwrite primarily liability and workers��compensation coverages on an excess and surplus basis and excess insurance for self-insured programs. General Re�� international property/casualty reinsurance business operations are conducted through internationally-based subsidiaries on a direct basis (through General Reinsurance AG, as well as several other General Re subsidiaries in 25 countries) and through brokers (primarily through Faraday, which owns the managing agent of Syndicate 435 at Lloyd�� of London and provides capacity and particip! ates in 1! 00% of the results of Syndicate 435).

Life/Health Reinsurance

General Re�� North American and international life, health, long-term care and disability reinsurance coverages are written on an individual and group basis. Most of this business is written on a proportional treaty basis, with the exception of the United States group health and disability business which is predominately written on an excess treaty basis. Lesser amounts of life and disability business are written on a facultative basis. The life/health business is marketed on a direct basis. The Berkshire Hathaway Reinsurance Group (BHRG) operates from offices located in Stamford, Connecticut. Business activities are conducted through a group of subsidiary companies, led by National Indemnity Company (NICO) and Columbia Insurance Company (Columbia). BHRG provides principally excess and quota-share reinsurance to other property and casualty insurers and reinsurers. BHRG�� underwriting activities also include life reinsurance and life annuity business written through Berkshire Hathaway Life Insurance Company of Nebraska and financial guaranty insurance written through Berkshire Hathaway Assurance Corporation.

BHRG writes catastrophe excess-of-loss treaty reinsurance contracts. BHRG also writes individual policies for primarily large or otherwise unusual discrete risks on both an excess direct and facultative reinsurance basis, referred to as individual risk, which includes policies covering terrorism, natural catastrophe and aviation risks. A catastrophe excess policy provides protection to the counterparty from the accumulation of primarily property losses arising from a single loss event or series of related events. Catastrophe and individual risk policies may provide amounts of indemnification per contract and a single loss event may produce losses under a number of contracts. BHRG also underwrites traditional non-catastrophe insurance and reinsurance coverages, referred to as multi-line property/c! asualty b! usiness.

The Berkshire Hathaway Primary Group is a collection of primary insurance operations that provide a variety of insurance coverages to insureds located principally in the United States. NICO and certain affiliates underwrite motor vehicle and general liability insurance to commercial enterprises on both an admitted and excess and surplus basis. This business is written nationwide primarily through insurance agents and brokers and is based in Omaha, Nebraska. U.S. Investment Corporation (USIC), through its three subsidiaries led by United States Liability Insurance Company, is a specialty insurer that underwrites commercial, professional and personal lines of insurance on an admitted and excess and surplus basis. Policies are marketed in all 50 states and the District of Columbia through wholesale and retail insurance agents. USIC companies underwrite and market 109 distinct specialty property and casualty insurance products. Medical Protective Corporation (MedPro) is based in Fort Wayne, Indiana. Through its subsidiary, the Medical Protective Company, MedPro is engaged in primary medical professional liability coverage and risk solutions to physicians, dentists, other healthcare providers and healthcare facilities.

Railroad Business

Through BNSF Railway, BNSF operates a railroad network in North America with approximately 32,000 route miles of track (excluding multiple main tracks, yard tracks and sidings) in 28 states and two Canadian provinces as of December 31, 2011. BNSF owns approximately 23,000 route miles, including easements, and operates on approximately 9,000 route miles of trackage rights that permit BNSF to operate its trains with its crews over other railroads��tracks. As of December 31, 2011, the total BNSF Railway system, including single and multiple main tracks, yard tracks and sidings, consisted of approximately 50,000 operated miles of track, all of which are owned by or held under easement by BNSF except for approximately 10,000 route! miles op! erated under trackage rights.

BNSF is based in Fort Worth, Texas, and through BNSF Railway Company operates railroad systems in North America. In serving the Midwest, Pacific Northwest, Western, Southwestern and Southeastern regions and ports of the country, BNSF transports a range of products and commodities derived from manufacturing, agricultural and natural resource industries. In serving the Midwest, Pacific Northwest, Western, Southwestern and Southeastern regions and ports of the country, BNSF transports a range of products and commodities derived from manufacturing, agricultural and natural resource industries. Over half of the freight revenues of BNSF are covered by contractual agreements of varying durations. BNSF�� primary routes, including trackage rights, allow it to access cities and ports in the western and southern United States as well as parts of Canada and Mexico. In addition to cities and ports, BNSF efficiently serves many smaller markets by working closely with approximately 200 shortline partners. BNSF has also entered into marketing agreements with other rail carriers, expanding the marketing reach for each railroad and their customers.

Utilities and Energy Businesses

MidAmerican�� businesses are managed as separate operating units. MidAmerican�� domestic regulated energy interests are comprised of two regulated utility companies serving more than three million retail customers and two interstate natural gas pipeline companies with approximately 16,600 miles of pipeline and a design capacity of approximately 7.7 billion cubic feet of natural gas per day. Its United Kingdom electricity distribution subsidiaries serve about 3.9 million electricity end-users. In addition, MidAmerican�� interests include a diversified portfolio of domestic independent power projects, a hydroelectric facility in the Philippines and residential real estate brokerage firm in the United States.

PacifiCorp is a regulated electric utility compa! ny headqu! artered in Oregon, serving regulated retail electric customers in portions of Utah, Oregon, Wyoming, Washington, Idaho and California. The combined service territory�� diverse regional economy ranges from rural, agricultural and mining areas to urban, manufacturing and government service centers. As a vertically integrated electric utility, PacifiCorp owns approximately 10,600 net megawatts of generation capacity. MidAmerican Energy Company (MEC) is a regulated electric and natural gas utility company headquartered in Iowa, serving regulated retail electric and natural gas customers primarily in Iowa and also in portions of Illinois, South Dakota and Nebraska. MEC has a diverse customer base consisting of residential, agricultural and a variety of commercial and industrial customer groups. In addition to retail sales and natural gas transportation, MEC sells regulated electricity to markets operated by regional transmission organizations and regulated electricity and natural gas to other utilities and market participants on a wholesale basis and sells non-regulated electricity and natural gas services in deregulated markets. As a vertically integrated electric and gas utility, MEC owns approximately 7,000 net megawatts of generation capacity.

The natural gas pipelines consist of Northern Natural Gas Company (Northern Natural) and Kern River Gas Transmission Company (Kern River). Northern Natural is based in Nebraska and owns interstate natural gas pipeline systems in the United States reaching from southern Texas to Michigan�� Upper Peninsula. Northern Natural�� pipeline system consists of approximately 14,900 miles of natural gas pipelines. Northern Natural has access to supplies from mid-continent basin and provides transportation services to utilities and numerous other customers. Northern Natural also operates three underground natural gas storage facilities and two liquefied natural gas storage peaking units.

Kern River is based in Utah and owns an interstate natural! gas pipe! line system that consists of approximately 1,700 miles and extends from the supply areas in the Rocky Mountains to consuming markets in Utah, Nevada and California. Kern River transports natural gas for electric utilities and natural gas distribution utilities, oil and natural gas companies or affiliates of such companies, electricity generating companies, energy marketing and trading companies, and financial institutions. The United Kingdom utilities consist of Northern Powergrid (Northeast) Limited (Northern Powergrid (Northeast)) and Northern Powergrid (Yorkshire) plc (Northern Powergrid (Yorkshire)), which own a substantial United Kingdom electricity distribution network that delivers electricity to end-users in northeast England in an area covering approximately 10,000 square miles. The distribution companies primarily charge supply companies regulated tariffs for the use of electrical infrastructure. MidAmerican also owns HomeServices of America, Inc. (HomeServices), a full-service residential real estate brokerage firm in the United States. HomeServices also offers integrated real estate services, including mortgage originations through a joint venture, title and closing services, property and casualty insurance, home warranties, relocation services and other home-related services. It operates under 22 residential real estate brand names with over 14,000 sales associates and in nearly 300 brokerage offices in 20 states.

Manufacturing, Service and Retailing Businesses

Berkshire�� numerous and diverse manufacturing, service and retailing businesses. Marmon consists of approximately 140 manufacturing and service businesses that operate independently within eleven diverse, stand-alone business sectors. These sectors are Building Wire, Crane Services, Distribution Services, Engineered Wire and Cable, Flow Products, Food Service Equipment, Highway Technologies, Industrial Products, Retail Store Fixtures, Transportation Services and Engineered Products and Water Treatment.

!

Building Wire, providing copper electrical building wire for residential, commercial and industrial construction. Crane Services provides the leasing and operation of mobile cranes primarily to the energy, mining and petrochemical markets. Distribution Services, supplying specialty metal pipe and tubing, bar and sheet products to markets including construction, industrial, aerospace and many others. Engineered Wire & Cable, providing electrical and electronic wire and cable for energy related markets and other industries. Flow Products is producing copper tube for the plumbing, heating, ventilation, and air conditioning (HVAC), refrigeration, and industrial markets. Food Service Equipment is supplying commercial food preparation equipment for restaurants and shopping carts for retail stores. Highway Technologies, primarily serving the heavy-duty highway transportation industry with trailers, fifth wheel coupling devices and undercarriage products such as brake parts and suspension systems, and also serving the light vehicle aftermarket with clutches and related products.

Industrial Products, consisting of metal fasteners for the building, furniture, cabinetry, industrial and other markets, gloves for industrial markets, portable lighting equipment for mining and safety markets, overhead electrification equipment for mass transit systems, custom-machined brass, aluminum and copper forgings for the construction, valve and other industries, brass fittings and valves for commercial and industrial applications, and drawn aluminum tubing and extruded aluminum shapes for the construction, automotive, appliance, medical and other markets . Retail Store Fixtures, providing shelving and other merchandising displays and related services for retail stores worldwide. Transportation Services & Engineered Products, including manufacturing, leasing and maintenance of railroad tank cars, leasing of intermodal tank containers, in-plant rail services, manufacturing of bi-modal railcar movers, wheel, axle ! and gear ! sets for light rail transit and gear products for locomotives, manufacturing of steel tank heads, and services, equipment and technology for processing and distributing sulfur. Water Treatment, equipment including residential water softening, purification and refrigeration filtration systems, treatment systems for industrial markets including power generation, oil and gas, chemical, and pulp and paper, gear drives for irrigation systems and cooling towers, and air-cooled heat exchangers. Marmon operates approximately 300 manufacturing, distribution and service facilities that are primarily located in North America, Europe and China, and employs more than 16,000 people worldwide.

McLane Company, Inc. (McLane) provides wholesale distribution and logistics services in all 50 states and internationally in Brazil to customers that include discount retailers, convenience stores, wholesale clubs, quick service restaurants, drug stores and military bases. Operations are divided into five business units: grocery distribution, foodservice distribution, beverage distribution, international logistics and software development. McLane�� foodservice distribution unit, based in Carrollton, Texas, focuses on serving the quick service restaurant industry. Operations are conducted through 18 facilities in 16 states. The foodservice distribution unit services more than 20,000 chain restaurants nationwide.

Other Manufacturing, Other Service and Retailing Businesses

Berkshire�� apparel manufacturing businesses include manufacturers of a variety of clothing and footwear. Businesses engaged in the manufacture and distribution of clothing products include Fruit of the Loom, Inc. (Fruit), Russell Brands, LLC (Russell), Vanity Fair Brands, LP (VFB), Garan and Fechheimer Brothers. Berkshire�� footwear businesses include H.H. Brown Shoe Group, Justin Brands and Brooks Athletic. Fruit, Russell and VFB (together FOL) is primarily a vertically integrated manufacturer and distributor of ba! sic appar! el, underwear and athletic apparel and products. Products, under the Fruit of the Loomand JERZEES labels are primarily sold in the mass merchandise and wholesale markets. In the VFB product line, Vassarette, Bestformand Curvationare sold in the mass merchandise market, while Vanity Fairand Lily of Franceproducts are sold in the mid-tier chains and department stores. FOL also markets and sells athletic uniforms, apparel, sports equipment and balls to team dealers; college licensed tee shirts and fleecewear to college bookstores and mid-tier merchants; and athletic apparel, sports equipment and balls to sporting goods retailers under the Russell Athleticand Spaldingbrands. Additionally, Spaldingmarkets and sells balls in the mass merchandise market and dollar store channel. During the year ended December, 31, 2011, approximately 30% of FOL�� sales were to Wal-Mart. FOL generally performs its own spinning, knitting, cloth finishing, cutting, sewing and packaging.

Garan designs, manufactures, imports and sells apparel primarily for children, including boys, girls, toddlers and infants. Products are sold under its own trademark Garanimalsand private labels of its customers. Garan also licenses its registered trademark Garanimalsto independent third parties. Garan conducts its business through operating subsidiaries located in the United States, Central America and Asia. Substantially all of Garan�� products are sold through its distribution centers in the United States to national chain stores, department stores and specialty stores. In 2011, over 90% of Garan�� sales were to Wal-Mart. Fechheimer Brothers manufactures, distributes and sells uniforms, principally for the public service and safety markets, including police, fire, postal and military markets. Fechheimer Brothers is based in Cincinnati, Ohio.

Justin Brands and H.H. Brown Shoe Group manufacture and distribute work, rugged outdoor and casual shoes and western-style footwear under a number of brand names, including! Justin, ! Tony Lama, Nocona, Chippewas, Born, Sofft, Carolina, Double-H Boots, Corcoran, Matterhornand Kork-Ease. Brooks Athletic markets and sells running footwear to specialty retailers under Brooksbrand. In 2011, Brooksachieved #1 market share in footwear with specialty retailers. A volume of the shoes sold by Berkshire�� shoe businesses are manufactured or purchased from sources outside the United States. Products are principally sold in the United States through a variety of channels including department stores, footwear chains, specialty stores, catalogs and the Internet, as well as through Company-owned retail stores.

Acme manufactures and distributes clay bricks (Acme Brickand Jenkins Brick), concrete block (Featherlite) and cut limestone (Texas Quarries). In addition, Acme distributes a number of other building products of other manufacturers, including glass block, floor and wall tile and other masonry products. Acme also sells ceramic floor and wall tile, as well as marble, granite and other stones through its subsidiary, American Tile and Stone. Products are sold primarily in the South Central and South Eastern United States through Company-operated sales offices. Acme distributes products primarily to homebuilders and masonry and general contractors.

Benjamin Moore & Co. (Benjamin Moore) is a formulator, manufacturer and retailer of a range of architectural coatings, available principally in the United States and Canada. Products include water-thinnable and solvent-thinnable general purpose coatings (paints, stains and clear finishes) for use by the general public, contractors and industrial and commercial users. Products are marketed under various registered brand names, including Regal, Superspec, Moorcraft, Moorgard, Aura, Nattura, ben, Coronado Paint, Insl-xand Lenmar.

Benjamin Moore and its manufacturing subsidiaries rely primarily on an independent dealer network for the distribution of its products. Its distribution network includes approximately 100! Company-! owned stores as well as over 4,500 third party retailers representing over 10,300 storefronts in the United States and Canada. Benjamin Moore�� Company-owned stores represent several multiple-outlet and stand-alone retailers in various parts of the United States and Canada serving primarily contractors and general consumers. The independent retailer channel offers an array of products including Benjamin Mooreand Insl-xbrands and other competitor coatings, wallcoverings, window treatments and sundries. Benjamin Moore also has three color stations located in regional malls that serve as brand marketing tools. In addition to the independent retailer channel, Benjamin Moore has recently begun to sell direct to the consumer through e-commerce sites and its customer care program, which includes national accounts and government agencies.

Johns Manville (JM) is a manufacturer and marketer of products for building insulation, mechanical insulation, commercial roofing and roof insulation, as well as fibers and nonwovens for commercial, industrial and residential applications. JM serves markets that include aerospace, automotive and transportation, air handling, appliance, HVAC, pipe and equipment filtration, waterproofing, building, flooring, interiors and wind energy. Fiber glass is the basic material in a majority of JM�� products, although JM also manufactures a portion of its products with other materials to satisfy the broader needs of its customers. JM regards its patents and licenses as valuable, however it does not consider any of its businesses to be materially dependent on any single patent or license. JM is headquartered in Denver, Colorado, and operates 40 manufacturing facilities in North America, Europe and China and conducts research and development at several other facilities. JM sells its products through a variety of channels, including contractors, distributors, retailers, manufacturers and fabricators.

MiTek is a provider of engineered connector products, engine! ering sof! tware and services and computer-driven manufacturing machinery to the truss fabrication segment of the building components industry. Primary customers are truss fabricators who manufacture pre-fabricated roof and floor trusses and wall panels for the residential building market, as well as the light commercial and institutional construction industry. MiTek also participates in the light gauge steel framing market under the Ultra-Spanname, manufactures and markets assembly line machinery used by the lead acid battery industry, manufactures and markets a line of masonry connector products and manufactures and markets air handling systems used in commercial building. MiTek operates on six continents with sales into approximately 90 countries. MiTek has 34 manufacturing facilities located in eleven countries and 45 sales/engineering offices located in 17 countries.

The Shaw Industries Group, Inc. (Shaw) is a carpet manufacturer based on both revenue and volume of production. Shaw designs and manufactures over 3,000 styles of tufted carpet, tufted and woven rugs, laminate and wood flooring for residential and commercial use under about 30 brand and trade names and under certain private labels. Shaw also provides installation services and sells ceramic and vinyl tile along with sheet vinyl. Shaw�� manufacturing operations are fully integrated from the processing of raw materials used to make fiber through the finishing of carpet. Shaw�� carpet, rugs and hard surface products are sold in a broad range of prices, patterns, colors and textures.

Shaw products are sold wholesale to over 40,000 retailers, distributors and commercial users throughout the United States, Canada and Mexico and are also exported to various overseas markets. Shaw�� wholesale products are marketed domestically by over 2,000 salaried and commissioned sales personnel directly to retailers and distributors and to national accounts. Shaw�� 10 carpet full-service distribution facilities, three hard surface an! d two rug! full-service distribution facilities and 24 redistribution centers, along with centralized management information systems, enable it to provide prompt efficient delivery of its products to both its retail customers and wholesale distributors.

Berkshire acquired an 80% interest in IMC International Metalworking Companies B.V. (IMC B.V.). Through its subsidiaries, IMC B.V. is a multinational manufacturers of consumable precision carbide metal cutting tools for applications in a range of industrial end markets under the brand names ISCAR, TaeguTec, Ingersoll, Tungaloy, Unitac, UOP It.te.diand Outiltec. IMC B.V.�� manufacturing facilities are located in Israel, United States, Germany, Italy, France, Switzerland, South Korea, China, India, Japan and Brazil. IMC B.V. has five primary product lines: milling tools, gripping tools, turning/thread tools, drilling tools and tooling. Forest River, Inc. (Forest River) is a manufacturer of recreational vehicles, utility, cargo and office trailers, buses and pontoon boats, headquartered in Elkhart, Indiana. Its products are sold in the United States and Canada through an independent dealer network.

Scott Fetzer companies are a diversified group of 20 businesses that manufacture and distribute a variety of products for residential, industrial and institutional use. The two of these businesses are Kirby home cleaning systems and Campbell Hausfeld products. Albecca Inc. (Albecca), headquartered in Norcross, Georgia, does business primarily under the Larson-Juhlname. Albecca designs, manufactures and distributes a complete line of branded custom framing products, including wood and metal moulding, matboard, foamboard, glass, equipment and other framing supplies in the United States, Canada and 15 countries outside of North America. CTB International Corp. is a designer, manufacturer and marketer of systems used in the grain industry and in the production of poultry, hogs and eggs.

Lubrizol is a specialty chemical company that pro! duces and! supplies technologies for the global transportation, industrial and consumer markets. Lubrizol operates two business sectors: Lubrizol Additives, which includes engine, driveline and industrial additive products and Lubrizol Advanced Materials, which includes personal and home care, engineered polymer and performance coating products. FlightSafety International Inc.(FlightSafety) is engaged primarily in the business of providing high technology training to operators of aircraft. FlightSafety�� training activities include advanced training for pilots of business and commercial aircraft; aircrew training for military and other government personnel; aircraft maintenance technician training; flight attendant and aircraft dispatcher training, and ab-initio (primary) pilot training to qualify individuals for private and commercial pilots��licenses. FlightSafety also develops classroom instructional systems and materials for use in its training business and for sale to others.

NetJets Inc. (NJ) is a provider of fractional ownership programs for general aviation aircraft. TTI, Inc. (TTI) is a global specialty distributor of passive, interconnect, electromechanical and discrete components used by customers in the manufacturing and assembling of electronic products. Business Wire provides electronic dissemination of full-text news releases daily to the media, online services and databases and the global investment community in 150 countries and 45 languages. Berkshire�� retailing businesses principally consist of several independently managed home furnishings and jewelry operations. The home furnishings businesses are the Nebraska Furniture Mart (NFM), R.C. Willey Home Furnishings (R.C. Willey), Star Furniture Company (Star) and Jordan�� Furniture, Inc. (Jordan��). NFM, R.C. Willey, Star and Jordan�� each offer a wide selection of furniture, bedding and accessories. In addition, NFM and R.C. Willey sell a line of household appliances, electronics, computers and other home furnishings. N! FM, R.C. ! Willey, Star and Jordan�� also offer customer financing to complement their retail operations. An important feature of each of these businesses is their ability to control costs and to produce high business volume by offering value to their customers.

NFM operates its business from two retail complexes with almost one million square feet of retail space and sizable warehouse and administrative facilities in Omaha, Nebraska and Kansas City, Kansas. NFM is a furniture retailer in each of its markets. NFM also owns Homemakers Furniture located in Des Moines, Iowa, which has approximately 215,000 square feet of retail space. R.C. Willey, based in Salt Lake City, Utah, is a home furnishings retailer in the Intermountain West region of the United States. R.C. Willey operates 11 retail stores, two retail clearance facilities and three distribution centers. Borsheim Jewelry Company, Inc. (Borsheims) operates from a single store located in Omaha, Nebraska. Borsheims is a high volume retailer of jewelry, watches, crystal, china, stemware, flatware, gifts and collectibles. Helzberg�� Diamond Shops, Inc. (Helzberg), based in North Kansas City, Missouri, operates a chain of 233 retail jewelry stores in 37 states, which includes approximately 550,000 square feet of retail space. Most of Helzberg�� stores are located in malls, lifestyle centers or power strip centers, and all stores operate under the name Helzberg Diamonds. The Ben Bridge Corporation (Ben Bridge Jeweler), based in Seattle, Washington, operates a chain of 70 upscale retail jewelry stores located in 11 states that are primarily in the Western United States. Three of its locations are concept stores that sell only PANDORA jewelry.

Finance and Financial Products

Clayton Homes, Inc. (Clayton) is a vertically integrated manufactured housing company. At December 31, 2011, Clayton operated 33 manufacturing plants in 12 states. Clayton�� homes are marketed in 48 states through a network of 1,333 retailers, inclu! ding 333 ! Company-owned home centers. Financing is offered through its finance subsidiaries to purchasers of Clayton�� manufactured homes as well as those purchasing homes from selected independent retailers. XTRA Corporation (XTRA), headquartered in St. Louis, Missouri, is a transportation equipment lessor operating under the XTRA Leasebrand name. XTRA manages a diverse fleet of approximately 83,000 units located at 63 facilities throughout the United States and two facilities in Canada. The fleet includes over-the-road and storage traile

Advisors' Opinion:

• [By Jonas Elmerraji]

  You don't have to be an expert technical analyst to figure out what's going on in shares of Berkshire Hathaway (BRK.B) -- this big conglomerate has been in a textbook uptrend since the start of 2013. That's propelled shares of the $287 billion firm by more than 30% year-to-date, nearly doubling the broad market's gains over the same period.

  Now Berkshire's channel higher is pointing towards an end to the recent churning in shares.

  Trendline support is strong in Berkshire Hathaway: this stock has bounced higher each of the last five times shares have tested the bottom of the channel. This week, with shares creeping closer and closer to support, it makes sense to be a buyer on the bounce. Buying off a support bounce makes sense for two big reasons: it's the spot where shares have the furthest to move up before they hit resistance, and it's the spot where the risk is the least (because shares have the least room to move lower before you know you're wrong).

  If you decide to jump into Berkshire here, I'd recommend putting in a stop on the other side of the 50-day moving average; it's been a good proxy for support in the last few months.

• [By Buffett]

   Berkshire Hathaway (BRK-B) -- could be one such value play right now. Suppressed by weakness in its industry and exposure to troubled financial stocks, among other things, these class B shares have slipped 13% from their 2011 closing high on Feb. 28 to trade recently for around $76. (Class A shares, which go for more than $110,000 each, have been equally weak.)

  At current prices, the stock trades about 30% below intrinsic value -- the true value of all its businesses combined -- estimates Whitney Tilson of T2 Partners, a hedge fund that owns Berkshire shares. "It's just about the cheapest we've ever seen it," says Tilson. Buffett himself, and his longtime investing partner Charlie Munger, have been publicly dropping hints that their stock might be a good buy now, says Pat Dorsey, director of research and strategy at Sanibel Captiva Trust.

  But there are a lot of investments wrapped into Berkshire, so it's worth looking under the hood for the solid core of the master's stock portfolio. Following is a look at seven of Buffett's best stock plays, why he owns them and why they make sense as buys if a weak market lies ahead.