10 Strangest Ways That States Tax You (or Don't)

February 25, 2015, 10:00 pm

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Filed under: Taxes, Sales Tax, Tax Laws

By David Mulhbaum

Funny thing about our federal system of government: There's that complicated tax code that Uncle Sam keeps and the IRS enforces. Then there's an even larger patchwork of taxation schemes crafted by 50 state legislatures, all coming up with new ways to extract coin from their citizenry. Some of these tax regimens are, well, quirky.

 

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Pssst! Have You Seen the Steals at Secondhand Stores?

February 25, 2015, 10:00 pm

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Filed under: Shopping, How to Save Money, Shopping Trends, Saving

By Allison Martin

I was introduced to the art of thrifting a few years back when I was going through a rough patch and desperately needed attire for an interview. I had frowned at the thought of shopping at Goodwill, Salvation Army or any other secondhand store. They were loaded with cheapskates, dusty fixtures and outdated clothing and smelled weird, or so I thought.

To my surprise, the first Goodwill I visited was massive and chockfull of irresistible deals. I landed a designer suit, blouse and accessories for around $15. (And the place had a pleasant aroma). After that initial visit, I was hooked and decided to explore similar establishments for deals. If you've never shopped secondhand, or not for a long time, here's what you're missing:

1. High-End Apparel for Less

The economy has improved, but many consumers who felt the pinch during the recession got a poignant lesson in frugality, and some also learned the allure of thrift store shopping.

Time put it this way: "Shoppers today, it seems, are reaping the benefits of years of overconsumption. The donations delivered to thrift stores often come directly from the overstuffed closets of the rich, or at least people who once shopped like they were rich -- and who barely wore the clothes before passing them on to the secondhand market."

I've witnessed this first hand with family members who spent thousands on designer items, only to consign them for a measly fraction of the purchase price or just give them away. This turns out to be great news for shoppers like me.

Quality has improved at thrift stores, too. Most don't try to sell every donation they take in. Instead, teams of volunteers or employees inspect incoming items to determine which are fit for sale. In most instances, the dregs are returned to the donor or passed on to another charitable organization.

It is not likely that you will find a Picasso worth millions at the thrift store. Expert treasure hunters scour these stores, estate sales and rummage sales, and they will get there first. You are likely to find used, but high-quality items that are going to serve you better and longer than cheap new things. That cheap new blouse may be stunning on the hanger, but one wear and wash will be enough to send it to the nearest trash bin.

An added bonus: You won't have to worry about pushy salespeople hovering over you, encouraging you to buy items you don't need just to fatten their commission.

2. Funky Fashion

Have you ever spotted a spunky item you'd like to try, but you have reservations because of the price? Well, thrift stores offer this option, minus the buyer's remorse. If it turns out that the colorful dress, oversized pair of earrings or leather purse no longer tickles your fancy, you won't be stressed out about it if you only spent a few bucks. (Of course, you can probably return the item, if you don't mind the hassle.)

Or you may discover you just landed a treasure. An former coworker was in desperate need of collared shirts for work, so he picked up a few from the Salvation Army. One of them happened to stand out because it was extremely bright. Upon further examination, we discovered it was a Lacoste shirt worth $70, and he got it for $1.75.

3. A Lot of Children's Stuff

Children grow way too fast! I wish I'd listened to the countless warnings during my first pregnancy so I wouldn't have spent so much on items my son didn't even use. The second time around, I didn't let history repeat itself. The bulk of little brother's apparel is either handed down from big brother or from the thrift store. We happen to live close to consignment shop that hosts $1 days twice a month, and it's not uncommon to spot designer labels, from Calvin Klein to Polo, on the racks. Toys are also included in that promotion, many of which are very gently used.

And have you seen the price of sneakers lately? Outrageous, considering they probably won't be around very long if your children grow like most. It doesn't help that I happen to have two boys that are very rough on shoes, so unless I have the chance to make it to the clearance centers, I also shop secondhand for those.

If you're searching for cleats or other athletic apparel, look out for those as well or try secondhand sporting goods stores. I've been able to save as much as 75 percent on athletic gear and equipment by buying used.

4. Home Goods Heaven

I'm not too fond of interior decorating. In fact, I pretty much stink at it, but I always notice a surplus of wall art, curtains, rugs and household fixtures, to name a few, when shopping. So if you desire to decorate your home in a way that stands out (and doesn't look like a spread from the furniture store's weekly circular), here's your chance. Best of all, you won't empty your wallet.

Along with the decorative items, thrift stores also sell high-end bedding, kitchen utensils and furniture. On a few occasions, I've purchased Pampered chef pans for pennies on the dollar. But my most memorable purchase from the Goodwill was my luxurious leather office chair for $30. The suggested retail price is $495.

Secondhand stores are here to stay, so stop throwing away your hard-earned cash and join the movement of fashionable, but frugal consumers. An important tip: Set a budget before you go. Even at a thrift store it is possible to overdo it, and it is tempting. So if you decide on $25, leave the plastic at home and only carry that amount of cash to the store. Once you've reached your limit, promptly head to the checkout counter. No exceptions.

What treasures have you landed by thrifting? Please share in the comments below or on the Money Talks News Facebook page.

 

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Key Factors You're Ignoring When Comparing College Costs

February 25, 2015, 10:00 pm

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Filed under: Cost of Living, College, Places to Live, Planning, Financial Education

College acceptances will soon come rolling in. Families of college-bound students already know how important it is to compare aid packages, look for scholarships and carefully assess loan terms.

But there's one factor not as many families think about: the cost of living in the cities their children are heading to. It may sound like a minor concern at first, but rent, food, transportation and other day-to-day expenses add up quickly -- especially once a student moves off campus.

As Kristan Venegas, an associate professor at the University of Southern California, told personal finance website WalletHub, "Going to school in San Francisco is likely to be a lot more expensive than going to school in a more rural area, like Columbus[, Ohio]."

Lunch Money

Thankfully for prospective students, WalletHub recently ranked 280 college towns on a variety of factors, including cost of living.

The college towns with the lowest cost of living were Memphis, Tennessee; Omaha, Nebraska; Columbus, Ohio; Killeen, Texas; and Augusta, Georgia. Bridgeport, Connecticut; San Jose, California; Santa Clara, California; and Honolulu had the highest cost of living, with Honolulu coming in at twice the cost of Memphis.

Venegas also pointed out another potential cost savings of living in a smaller city: "One of the advantages of living in a smaller town or a 'college town' is that there are many services and discounts that are focused primarily on the college student population. You may receive special student discounts at local businesses that are not as widespread in a large urban area."

Work It

Many students get part-time jobs to help pay tuition or earn spending money. WalletHub looked at how many part-time jobs were available in each college town. State College, Pennsylvania; East Lansing, Michigan; and Oxford, Ohio, stood out, with the most part-time work available.

Another consideration for prospective students (and their hopeful parents) is how easy it may be to find a full-time job after graduation. Oxford, Ohio, again made the top of the list here, followed by Austin, Texas, and Charlottesville, Virginia.

(Not So) Petty Cash

Other financial considerations you might want to add to your pros-and-cons list include:

• Distance: How far are your child's preferred colleges from home? How will he or she get home for breaks? Airfare costs can really add up -- make sure your child knows what you can budget for travel and how that might affect how often he can rely on you to do his laundry.
• Transportation: Is on-campus transportation necessary or can students walk or bike everywhere they need to go? What transportation is provided? Are students allowed to have cars on campus? When? (Rules vary widely as to which students are entitled to parking passes.) Is public transportation available? This may not be as much of an issue for freshmen as it is for older students hoping to work part-time or get internships.
• Housing: Is on-campus housing available for all four years? If not, rent can vary quite a bit from the cost of on-campus room and board depending on the area around the school. Make sure you plan for changes in housing costs over the years and talk with your child about what he or she can afford, whether it's an urban penthouse or a railroad flat shared with several friends.
• Technology: A laptop is a must for college students, as is a cellphone. But what about a Kindle or iPad? Many textbooks are available digitally for purchase or rent through Apple's (AAPL) iTunes Store and Amazon.com (AMZN), which might be more convenient than purchasing physical textbooks. Also, be aware of any technology requirements a college might have: Some have a list of specifications that students' laptops must meet, and others have even started requiring students to have an iPad or other tablet. Your student may have some or all of the devices he or she will need for the school of their choice, but if not, these can add a few thousand bucks to your mounting college bill.

Cash Isn't Always King

While financial factors are crucial considerations, WalletHub's overall rankings for the best and worst college towns looked at lifestyle factors as well, including crime rates, social outlets like cafes and nightclubs, and number of young people.

The overall winners? Oxford, Ohio; State College, Pennsylvania; and Chapel Hill, North Carolina. Of course, there's no single score or ranking that can determine the right school for your child. Costs are only part of the picture, but taking time to consider all the expenses involved can result in big savings over time.

Motley Fool contributor Robyn Gearey owns shares of Amazon.com and Apple. The Motley Fool recommends and owns shares of Amazon.com and Apple. Try any of our Foolish newsletter services free for 30 days. Check out our free report on the Apple Watch to learn where the real money is to be made for early investors.

 

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Money Can't Buy Happiness for Retirees: These Things Can

February 25, 2015, 10:00 pm

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Filed under: Retirement, Retirement Living

By Dave Bernard

Some people think they understand how retired living will go, but you don't really know what retirement entails until you start living the life of a retiree. Until you are able to do whatever you choose 24/7, you cannot fully appreciate the significance and sometimes burden of managing free time. And you can only imagine what it is like to walk in the shoes of a 70-year-old until you reach that age yourself. Here are the essential considerations that can impact your retirement happiness.

Focus on You

Consider using some of your newfound free time to pay a little attention to the person you have been unfairly ignoring for too long: yourself. Since you are no longer pursuing a career, the persona derived from and dependent on your job is free to evolve. What you do is no longer defined by your role at the company. You now have an opportunity to pursue interests you may have been forced to ignore up to this point, perhaps including silly hobbies you had as a kid, additional education in areas that spark your interest or new activities ranging from gardening to hang gliding. This is your chance to focus on you and what you enjoy. It can also be a time for a little introspection. Retirement provides a time to evaluate how happy you are with the person you have become and what aspects of your life you would like to fine tune.

Freedom to Do Whatever You Want

Retirement is the long-awaited chapter in life where you are finally able to do what you really want. There is no more nine-to-five job, struggling to save or fighting to climb the corporate ladder. Retirement is a time to vacation, explore new things and try whatever strikes your fancy. You get complete control of your day and how you spend your time. This freedom to relax or stay busy is what makes retirement most satisfying.

Live the Lifestyle You Dream About

Not everyone will be happy just getting to retirement. Once there, some people hope to live a lifestyle above and beyond what they are accustomed to. After decades of saving it is time to spend and enjoy. Some people might want luxurious accommodations and amenities when traveling and multi-course gourmet extravaganzas when dining out, while others will be happy living a more frugal existence with plenty of time to take advantage of free and low-cost local activities. By observing current retirees you might be able to catch a glimpse of how retirement works. And the lifestyle your retired parents live can provide a firsthand case study of how it is done, although there have been a lot of changes since their generation left the workforce. It helps to read newspaper or magazine articles about retirees and begin to picture the retired life you hope to live.

Do Something That Matters

Retirement presents an opportunity to focus on what matters to you personally. Rather than living for a paycheck, you can concentrate your energy on things you feel passionate about. For some people this means volunteering for a worthy cause, while others may share their career knowledge with small companies struggling to make it. Maybe you want to document your family history for future generations, injecting your personal insight and sense of humor throughout. If it matters to you, it matters. And as a retiree, you are able to do something about it.

Challenge Yourself

If you want to get better at something, you need to work at it. Retirement is no different. Whether trying your hand at a new puzzle to keep your mind sharp or walking an additional mile to keep your heart fit, facing new challenges helps you stay engaged with living. Throwing something new into the mix just might make the day more memorable. Just because you have not done it before does not mean you cannot take a shot now. You may even surprise yourself with what you are capable of.

Dave Bernard blogs at Retirement-Only The Beginning.

 

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Got a Good Credit Card Offer? Take Advantage of It Now

February 25, 2015, 10:00 pm

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Filed under: Credit, Banking, Credit Cards, Federal Reserve, Interest Rates

High interest rates. Unexpected rate hikes. Late fees. In many ways, American consumers feel at the mercy of -- and taken advantage of by -- credit card companies. Just once, it would be nice to get some payback, and take advantage of the credit card companies themselves for a change.

Well, now you can.

For the past five years, the good folks at Bankrate.com (RATE) subsidiary CreditCards.com have been tracking the comings and goings of credit card issuer offers, and clueing consumers in to which offers are worth biting on. Turns out, this year is looking like an above-average one for credit card perks.

According to CreditCards.com, out of 100 popular credit card offerings, 38 now offer consumers the option of transferring balances from another card at lower-than-their-normal interest rates for at least 12 months. Of these cards, 17 offer 15 months at such promotional rates. (A year ago, the equivalent numbers were just 33 and 10.) One card in particular, the Citi Diamond Preferred from Citibank (C), offers 18 months of 0 percent interest on balance transfers -- and also on new purchases.

Meanwhile, 40 of the 100 credit cards surveyed will charge you 0 percent interest on your balance transfers (not all for 12 to 15 months, however).

Hey, Look! Free Money!

What does this mean to you? Potentially, hundreds of dollars in savings on your credit card bill. CreditCards.com lays out the math: "Take, for example, a consumer who has an existing $5,000 balance. Let's say that consumer transfers the balance to a new card with the most-common offer found in our survey: a card with a 12-month, 0-percent introductory rate and a 3 percent fee. If the consumer pays it off in a year, payments will total $5,150, including the fee. Compare that to the consumer who starts with the same debt, but pays if off using ... a typical 15 percent APR credit card. That consumer would pay $5,415 -- $265 more."

And that's assuming that the consumer is a disciplined cardholder who really does pay off the entire $5,000 balance in a year. Should paying off that balance on a typical credit card take two years instead of one, the cost of payback rises from $5,415 to $5,818. Three years: $6,240. Four years: $6,679. Plus, the longer you take to pay back the debt, the more chances you get to miss a payment and add late fees to the principal...

This Is a Limited-Time Offer -- Act Now

Long story short, the sooner you take advantage of today's lenient credit balance transfer terms (made possible, and made lenient, by continuing low interest rates courtesy of the U.S. Federal Reserve), the better. This is especially true because Fed watchers think interest rates will begin to rise this year -- perhaps as early as June. Once that happens, you can expect two things:

• First, credit card interest rates will rise (raising the cost of carrying a balance).
• Second, the generous offers of 12, 15 or even 18 months of 0 percent financing on balance transfers will go away.

And speaking of "going away," it's worth highlighting that what used to be the primary problem with taking advantage of balance transfer offers is no longer a concern. We're referring to the historical practice of credit card companies offering "0 percent interest" on balance transfers, combining that with (for example) 15 percent interest on new purchases -- and then applying all payments to the 0 percent balance first.

So Long to Payment Allocation Trickery

CreditCards.com used to refer to this practice as "payment allocation trickery," and it worked like this:

• First, you transfer $5,000 (for example) to a new card at 0 percent.
• Then you rack up, say, $1,000 in new charges on that card (at 15 percent interest).
• Not wanting to pay interest, you then send your credit card company a check for $1,000.
• The credit card company, though, would apply your entire $1,000 to the 0 percent balance (dropping it to $4,000).

The card company would, however, continue to charge you at 15 percent on the $1,000 in new charges. And you wouldn't get a chance to pay a dime's worth of that interest-charging balance until the balance transferred at 0 percent had been paid off in full.

This practice, however, was made illegal when Congress passed the CARD Act in 2009. As of today, card companies can still apply the minimum monthly payment portion of your bill to the 0 percent balance if they so desire. But they must apply everything above that minimum payment to the highest-interest balances on your card, before moving on to balances charging lower interest rates.

Mind you, this makes it doubly important to always pay more than the minimum, and to pay off your balance as soon as possible after accepting a balance transfer offer. But if you can do that, then there's simply no reason not to take advantage of credit card companies' newfound "generosity" on balance transfer terms -- while it lasts.

Motley Fool contributor Rich Smith has 99 problems, but not getting enough credit card offers in the mail ain't one. The Motley Fool owns shares of Citigroup. Try any of our Foolish newsletter services free for 30 days. To read about our favorite high-yielding dividend stocks for any investor, check out our free report.

 

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Have a Low-Interest American Express Card? Not for Long

February 25, 2015, 10:00 pm

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Filed under: Credit, Banking, Credit Cards

If you are an American Express customer with a low interest rate, you may soon receive a letter telling you of your new, higher rate. American Express is increasing the interest rate for more than 1 million customers, Bloomberg reports. The average interest rate increase will be 2.5 percentage points, and the minimum interest rate charged will be 12.99 percent.

American Express did not seem to consider how long people were members or how responsibly they used their credit. Instead, it considered people whose interest rates were below rates charged by rival cards for borrowers with "similar credit profiles."

The average American house has $10,000 of debt, and 2.5 percentage points could cost more than $2,000 of additional interest annually, depending upon the size of the payment and the amount that you charge each month.

Can American Express Do This?

The Credit Card Accountability Responsibility and Disclosure Act of 2009 increased consumer protection, especially as it relates to repricing. Under the CARD Act, lenders could no longer increase interest rates on existing balances. However, lenders still have the ability to increase the interest rate on future purchases, and credit cards companies use that tool to maintain the high returns of credit cards. Even paying one day late (regardless of your credit score) can result in a fee of $38 and an increase in your interest rate on future purchases to 20 percent or higher.

In addition, credit card companies are allowed to increase interest rates on go-forward purchases for almost any reason at all. However, the credit card issuer must give a 45-day written notice of a rate increase.

So, yes, credit card companies can still increase your interest rate, and all they need to do is send you a letter and give you a bit of notice. That is one of the reasons credit cards remain an incredibly expensive way to borrow.

Why Is American Express Doing This?

This rate increase is simply the result of American Express looking for ways to increase its earnings. And we shouldn't be surprised. In just the last few weeks, American Express has lost its contract with Costco and JetBlue.

But the problems don't stop there. The American Express business model is built upon charging merchants a higher interchange fee than either Visa or MasterCard. They justify this higher fee because American Express customers are supposedly more affluent and spend more in the stores. The higher interchange is then used to fund richer rewards, through the Membership Rewards program.

However, merchants have long complained that they are subsidizing American Express and have wanted to promote cheaper payment alternatives to consumers. If a merchant accepts American Express, they are prohibited from encouraging customers to use a cheaper payment option. But all of that changed when a U.S. District Court in February ruled that these non-discrimination rules prevent competition. Merchants can now encourage people to use cheaper payment methods.

In short, American Express is doing this because it can. And, I suspect, because it feels it must do so to make up for lost earnings.

What Can I Do?

If you pay your balance in full and on time every month, you are not paying interest, and this change does not effect you. You will continue to earn your rewards and receive the service that you are used to receiving.

If you cannot afford to pay your balance in full every month, you will end up paying interest. And interest rates on credit cards tend to be incredibly expensive. For people with credit card debt and good credit scores (above 700), you can consider a balance transfer. With a balance transfer, you move the debt from a high rate credit card company to a lower promotional rate. Some of the best offers are from credit unions, that are offering promotional rates as low as 2.99 percent for 24 months. You can find a full list of balance transfer options at MagnifyMoney. If you complete a balance transfer, just make sure you do not spend on the new credit card, and you pay on time and in full every month. Also make sure you have a plan for the end of promotional period.

If your credit score is below 700, you may want to consider a personal loan, especially from some of the new emerging lenders. You can see if you are approved with a soft pull (does not impact your credit score), and you will be given an interest rate. Compare the APR (which includes fees) to the interest rate on your American Express, and you can determine if the deal works for you. You can find a list of personal loan companies at MagnifyMoney.

Even if you are really angry with American Express, we encourage you not to close your credit card. Keeping an open credit line helps your credit score. But, if you want to stop using the credit card and do not want to pay an annual fee, you can ask American Express to convert your credit card to a no-fee option. That way you don't hurt your credit score and you stop paying a fee.

Expect More of This

Banks and credit card companies set themselves a relatively simple goal: they want to make more money in the next three months than they did in the last three months. When they lose revenue somewhere, they look to replace it. American Express is looking for more revenue, and unfortunately they are going after some of their best customers. You would have to imagine that customers with the lowest rates have probably been with them the longest, and behaved the most responsibly. It is a shame. But, there are other options out there, and American Express may learn that short-term earnings will only harm long-term loyalty.

Nick Clements is the co-founder of MagnifyMoney, a price comparison website that helps you find the cheapest bank accounts, and the best interest rates on your savings and your debt. He spent nearly 15 years in consumer banking, and most recently he ran the largest credit card business in the U.K. You can follow him on Twitter @npclements

 

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2015 Is Shaping Up to Be a Monster Year for Buyouts

February 25, 2015, 10:00 pm

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Filed under: Company News, Retail, Mergers & Acquisitions, Transportation & Logistics, Travel Industry

2015 looks set to be a banner year for mergers and acquisitions. Which is saying something -- 2014 was extremely busy in this regard, with total worldwide M&A volume hitting $3.5 trillion. That amount was the highest since 2007, and nearly 50 percent over 2013's tally, according to Thomson Reuters. North America was responsible for a bit less than half of that total.

That momentum is still strong. We're only two months into the year, and already several notable deals have been announced. Here's a look at three; expect this list to grow much longer as the year stretches on.

Staples/Office Depot

The ink is barely dry on the news of this merger, which was agreed to in early February. Using a blend of cash and stock amounting to roughly $6.3 billion, Staples (SPLS) aims to swallow long-time rival Office Depot (ODP).

Staples made an initial grab at its competitor back in 1997, but the deal was shut down by the Federal Trade Commission on the back of anti-competition concerns. Since then, the Internet has provided plenty of competition for both companies. Amazon.com (AMZN) sells office products among its many categories of goods, as do general retailers such as Costco (COST) and Target (TGT).

Regardless, anti-trust concerns seem to be hanging in the air. Neither Staples' nor Office Depot's stock price has moved significantly since the buyout was announced. This suggests that investors are still holding their collective breath for indications whether or not it'll be green-lit by the regulator.

If it does, Staples will certainly be in a better position to compete. But $6 billion-plus is a lot of money, and Amazon.com, Target, et al are tough opponents. It'll need more than size to win more market share.

Expedia/Orbitz

Another deal agreed to in February is one in which Expedia (EXPE) will shell out around $1.6 billion for Orbitz (OWW) to become the No. 1 online travel agency in terms of market share.

This was announced mere weeks after Expedia paid $280 million to acquire another famous name in the sector, Travelocity, from its parent company, Sabre (SABR).

Orbitz and Travelocity will have plenty of company in Expedia's portfolio. Expedia already owns Hotels.com, Hotwire and Trivago.

Expedia's acquisitions binge is necessary if the company wants to compete as a top online travel agency. The market is being squeezed by suppliers, i.e., the airlines and hotels that Expedia and its ilk need for their business. Many of these are becoming more effective at selling their wares directly to customers, cutting out the middleman entirely.

Meanwhile, small independent operators are creeping up on the market and battling for much of the same business. And another big player, Priceline Group (PCLN), has similarly amassed a collection of noted brands.

So even as a bulked-up company with a fat portfolio, Expedia will have its work cut out for it. This isn't an easy market to succeed in; we'll see if the company and its many assets are up to the challenge.

Dollar Tree/Family Dollar

This buyout was the culmination of a takeover fight that lasted several months, and it involved three discount retailers with confusingly similar names.

Family Dollar (FDO) was the target, and its first bidder was Dollar Tree (DLTR). The latter offered around $8.5 billion worth of cash and stock last summer.

That spurred fellow discounter Dollar General (DG) -- the largest company of the trio, boasting revenues that roughly equal those of the other two combined -- to make a richer offer several weeks later. It bid $9.1 billion, all in cash, for Family Dollar.

But Dollar General could never quite shake concerns that its buyout, if realized, might have necessitated store closings on the back of regulatory antitrust concerns. The combined company would have had roughly $7.3 billion in revenues and almost 20,000 stores in operation, dwarfing Dollar Tree's $2.1 billion and 5,282, respectively.

So in January, Family Dollar's shareholders voted overwhelmingly for the apparently safer bid from Dollar Tree. Which, thanks to the acquirer's substantially higher stock price these days, is now worth around $8.7 billion.

Regulatory advantages aside, the deal looks like a sensible tie-up of two complementary companies: Family Dollar sells name brands at different levels of discounted prices, while Dollar Tree sells products that always cost $1 or less.

"For Sale" Signs?

This is just the tip of what could be a big iceberg. Numerous rumors are swirling around the market regarding potential buy-outs and tie-ups -- to name but one, Time Warner (TWX) could prove to be takeover bait following last year's abandoned buyout bid from 21st Century Fox (FOX).

We almost certainly haven't seen the last of the big-ticket deals for 2015. Watch this space for more in the coming months.

Motley Fool contributor Eric Volkman has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Costco Wholesale and Priceline Group. The Motley Fool owns shares of Amazon.com, Costco Wholesale, Priceline Group and Staples. Try any of our Foolish newsletter services free for 30 days.

 

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The True Cost of Auto Insurance Fraud

February 26, 2015, 1:00 am

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Filed under: Personal Finance, Auto Insurance, Ripoffs & Scams

Insurance fraud isn't simply the act of people taking advantage of a faceless corporation, as the ethically challenged may claim. It costs all Americans through increased premiums, and it can take a much worse toll in some cases -- even potentially resulting in death.

Auto Insurance Fraud Is on the Rise

According to the National Insurance Crime Bureau, auto insurance is the greatest component of overall insurance fraud. In the 2013 NICB report, suspected cases of auto insurance fraud rose 12.7 percent from 2011 to 2012, reaching a nationwide total of 78,024. This raised the three-year total from 2010 to 2012 to over 209,000 questionable claims.

To put this in perspective, auto-related questionable claims during 2012 were over 4½ times more prevalent than the next highest category (17,183 homeowner's personal property questionable claims) and almost seventeen and a half times more than the third place category (workers compensation, including employer's liability).

Studies estimate almost 25 percent of the bodily injury claims related to auto crashes are bogus. Property and casualty claims against auto insurance aren't much better, coming in at around a 10 percent fraud rate.

The NICB estimates the direct cost to you at around $200 to $300 a year extra tacked onto your premium. The indirect costs are likely to be far more than that, estimated at around $1,000 a family according to the Texas Department of Insurance.

The indirect costs aren't always obvious, but they are significant. For example, some portion of the prices you pay for goods and services is devoted to covering the inflated insurance costs of the business -- and for fraud schemes, businesses are even more tempting targets than individuals.

Estimates vary on the overall cost, but the Coalition Against Insurance Fraud puts the cost of fraudulent claims in the range of $80 billion annually. Claims tend to rise during difficult economic times, and the recent recession was no different.

Types of Fraudulent Claims

What is the nature of all of these bogus claims? Auto insurance fraud is typically broken into two classifications -- "hard" and "soft."

Hard fraud occurs when an insurable event is either staged or fabricated outright. This includes scams such as phony hit and run accidents, triggered rear-end collisions, and fake car thefts.

Soft fraud refers to inflating a legitimate claim to cover nonexistent or unrelated charges. Examples include claiming damage from a previous event or racking up unjustified medical expenses claiming the wreck was at fault. Underwriting fraud, or misrepresenting your insurance information to lower your premiums, may also be considered a form of soft fraud.

The Auxiliary Dangers

In the case of auto insurance fraud, hard fraud is on a significant increase and staged accidents account for the greatest part of it. Staged accidents often involve innocent people who happen to be in the wrong place at the wrong time and get inadvertently caught up in a staged collision or a subsequent chain reaction.

There have been multiple cases of injuries and deaths from staged accidents that spiral out of control, and people have been successfully prosecuted as a result. Unfortunately, that doesn't bring back the deceased or heal the disabled.

Help Stop Auto Insurance Fraud

If you suspect auto insurance fraud, or any other type of insurance fraud, the has a toll-free hotline (800-835-6422) that you can call to report the fraud anonymously for further investigation. We hope that you never find yourself in this situation -- but if you do, please be part of the solution and not part of the problem.

 

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Chrysler Recalls Midsize Sedans That Could Roll Away

February 26, 2015, 1:11 am

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Filed under: Company News, Chrysler, Automotive Industry, Consumer Protection, Auto Recalls

DETROIT -- Fiat Chrysler (FCAU) is recalling nearly 26,000 midsize cars in North America to fix automatic transmissions that might not shift into park.

The recall covers the Chrysler 200 with V-6 engines from the 2015 model year. The company said manufacturing problems at a parts supplier's factory can cause the nine-speed transmissions to malfunction. Cars could roll away unexpectedly if the transmissions won't shift into park. Also, the shifter might show that the car is in park when it it's in another gear.

The company said Thursday that owners should activate the parking brake before shutting off the engine, until repairs can be made.

Chrysler said it has five customer complaints about the problem, but it knows of no crashes or injuries.

Dealers will inspect and replace transmissions if needed. Customers will be told when they can bring the cars in for service.

Customers with questions can call Chrysler at 800-853-1403.

 

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Lower Gas Prices Keep a Lid on Consumer Inflation

February 26, 2015, 1:42 am

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Filed under: GDP, Inflation, Manufacturing, Economy, This Built America

By Lucia Mutikani

WASHINGTON -- U.S. consumer prices in January posted their biggest drop since 2008 as gasoline prices continued to tumble and underlying inflation rose modestly, which could allow a cautious Federal Reserve more room to hold off on raising interest rates.

Other data Thursday showed a rebound in business investment spending plans, but probably not enough to change expectations of moderate economic growth in the first quarter.

"It will be some time before the Fed gets the necessary confirmation that inflation will move back to target in the medium-term, and we continue to see September as the most natural starting point for the lift-off in rates," said Millan Mulraine, deputy chief economist at TD Securities in New York.

The Labor Department said its Consumer Price Index fell 0.7 percent last month, the largest decline since December 2008, after slipping 0.3 percent in December. It was the third straight month of decline in the index.

In the 12 months through January, the CPI fell 0.1 percent, the first decline since October 2009 and a sharp deceleration from December's 0.8 percent rise.

Fed officials have long viewed the energy-driven drop in inflation as transitory. The U.S. central bank has a 2 percent inflation target.

Fed Chair Janet Yellen told lawmakers this week that the central bank's policy-setting committee "needs to be reasonably confident that over the medium-term inflation will move up toward its 2-percent objective" before it starts to raise interest rates.

Policymakers could take comfort from a marginal rise in underlying price pressures. The so-called core CPI, which strips out food and energy costs, rose 0.2 percent in January after edging up 0.1 percent in December.

Economists, however, believe the effects of lower energy prices and a strong dollar still have to work their way through to the core CPI, which could mean tame readings in the months ahead.

The core CPI was lifted by increases in the cost of shelter, recreation and apparel prices. In the 12 months through January, the core CPI rose 1.6 percent after a similar gain in December.

Oil Glut

Softer global demand and increased shale oil production in the United States have caused an oil glut, causing crude prices to plummet.

Domestic gasoline prices plunged 18.7 percent in January, the biggest drop since December 2008, after falling 9.2 percent in December. Gasoline prices have now declined for seven straight months.

Separately, the Commerce Department said non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending intentions, increased 0.6 percent last month after a revised 0.7 percent fall in December.

Business investment has been hurt by a softening global economy, as well as a strong dollar, which has dented the overseas profits of some companies. Lower crude oil prices also are undercutting demand for equipment in the oil field.

Shipments of core capital goods, which are used to calculate equipment spending in the government's gross domestic product measurement, fell 0.3 percent last month after rising 0.3 percent in December.

Business spending was a drag on growth in the fourth quarter, holding the economy to a 2.6 percent annualized pace. First-quarter growth is currently forecast at around a 2.3 percent rate.

A second report from the Labor Department Thursday showed initial claims for state unemployment benefits increased 31,000 to a seasonally adjusted 313,000 in the week ended Feb. 21.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 11,500 to 294,500 last week.

 

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Get the Most Out of Unexpected Money -- Savings Experiment

February 26, 2015, 4:00 am

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Filed under: Personal Finance, Savings Experiment

Whether it's an inheritance, a settlement, a bonus or lucky lottery ticket, you may find yourself with a large sum of unexpected money. It's a great problem to have, but studies have shown that up to 70 percent of people tend to spend it all within a couple of years. Here are a few tips to help you keep your sudden windfall from disappearing into thin air.

Big money always tends to stimulate big spending, which is why your first step should be to wait six months before shelling out a cent. This means no luxurious gifts for your family and friends, no new investments and no exotic vacations. Give yourself some time to come up with a solid plan, so you don't make any impulsive decisions you'll regret later.

Next, to help you with those plans, consider hiring a qualified financial adviser to help you create a budget and do some long-term financial planning. To help you find an advisor you can trust, ask friends for referrals and always check credentials by going online to sites like Finra.org. Here you'll be able to enter the background of an investment professional and receive full disclosure about their track record and practices. And while you're looking, try to find an adviser who is paid by the hour, not by commission.

Lastly, always assess your financial weaknesses, so you can strategically use your new windfall to improve your position. For example, if you're behind on the mortgage, use your money to catch up and eliminate those late fees. Or, take a look around the house and try to focus on things that will reduce your overhead, like installing energy efficient appliances.

Remember, just because you have money falling from the sky doesn't mean your head should be in the clouds. Use these strategies to get the most out of your money, while keeping your good fortune from going up in smoke.

View Poll

 

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No Thanks! Startups Reject 'Shark Tank' Deals, Still Thrive

February 26, 2015, 4:40 am

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Filed under: Media, Small Business, Entrepreneurs, This Built America

By JOYCE M. ROSENBERG

NEW YORK -- With the cameras rolling, Daniel and Stephanie Rensing accepted an offer from a "Shark Tank" investor. But after they had time to think about it, they changed their minds.

Annual revenue for their company, The Smart Baker, is close to $1 million, up from $130,000 before their March 2012 appearance on the ABC reality TV show.

"Not doing the deal and having that exposure was probably the best scenario for us," says Daniel Rensing, CEO of the Rockledge, Florida, company which sells aprons, parchment paper and other baking equipment.

Not doing the deal and having that exposure was probably the best scenario for us.

Dreams of investor money have induced more than 150,000 businesses to apply to be contestants on "Shark Tank," where entrepreneurs pitch to cast members including Barbara Corcoran, founder of a prominent New York real estate brokerage; Daymond John, founder of the clothing company FUBU; and Robert Herjavec, founder of the technology conglomerate Herjavec Group.

Entrepreneurs may be all smiles when they get an offer on the show, but the deals aren't set in stone. Negotiations start soon after episodes are taped. Contestants can walk away if they don't like the terms.

"When we shake hands on a potential deal on Shark Tank, the romance runs high and everyone's excited about what could be," Corcoran says. "In the end, the entrepreneur is in charge."

During the first five seasons, 374 contestants appeared on TV and investors made 190 offers, according to ABC (DIS). Forty-eight contestants turned down offers during taping, executive producer Clay Newbill says. They haven't tracked how many deals fell apart during negotiations.

The producers ask entrepreneurs and investors to make their best efforts to close deals, Newbill says.

"But we understand, just as in the real world, the reality is that not all deals will close," he says.

Second Thoughts

Corcoran offered $75,000 for 40 percent of The Smart Baker, and a 5 percent sales royalty, during the 2011 taping. During negotiations the Rensings, disagreed with Corcoran about the target market.

"We were sticking to our guns on the market we served," Rensing says.

Corcoran says she was disappointed, but she knows a rejection is an occupational hazard on "Shark Tank."

"Nobody likes to be turned down, especially me," she says.

The Smart Baker has thrived without her money. In the following year, revenue grew to $600,000. The episode also helped the company get noticed by Food Network (SNI) and other media. Reruns provide a sales bump.

But a "Shark Tank" deal isn't just about money; it also brings expertise and mentoring from a pro. The Rensings don't dwell on what they might have missed by not sticking with Corcoran.

"There is always the 'what ifs,' but we don't let that get to us," Daniel Rensing says.

The Right Move

Some contestants may turn down offers because they feel there are more important things than getting investors, says Matthew Rutherford, an entrepreneurship professor at Oklahoma State University who has studied "Shark Tank" pitches.

"What they crave over everything including money and wealth is autonomy," Rutherford says.

Entrepreneurs who appear on the show are likely hoping for both a cash infusion and control of their companies, says Harvard Business School professor Noam Wasserman. But the money doesn't guarantee success, and having an investor may be an unpleasant experience.

"You could end up with the worst of both worlds," he says.

Not Afraid to Say 'No'

When Mona Weiss and Scott Shields pitched their company, Eco Nuts, on an episode that aired in October 2012, Herjavec offered $175,000 for 50 percent. Weiss and Shields, who wanted to sell a 15 percent stake for that amount, said no on the spot.

"It was a terrible deal, really awful. No one would give up half their company for less than they make in a year," Weiss says. The Lawndale, California, company, which makes laundry detergent from berries, was on track for $250,000 in revenue in 2012.

A spokeswoman for Herjavec, Erin McLean, says he doesn't comment on deals or offers that are closed.

Some people told Weiss and Shields they were foolish.

"They said, 'it was a lot of money, you should have taken that,'" Weiss says.

But being on "Shark Tank" put Eco Nuts on a faster track to its current success. Revenue, now over $1 million, grew so much the company moved to manufacturing space five times bigger than its original factory.

 

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Regulators OK Tougher Rules for Internet Providers

February 26, 2015, 5:32 am

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Filed under: U.S. Government, Internet, Telecommunications, Mobile Technology

By ANNE FLAHERTY

WASHINGTON -- Internet activists declared victory over the nation's big cable companies Thursday, after the Federal Communications Commission voted to impose the toughest rules yet on broadband providers like Comcast (CMCSK), Verizon (VZ) and AT&T (T) to prevent them from creating paid fast lanes and slowing or blocking web traffic.

The 3-2 vote ushered in a new era of government oversight for an industry that has seen relatively little. It represents the biggest regulatory shake-up to telecommunications providers in almost two decades.

The new rules require that any company providing a broadband connection to your home or phone must act in the "public interest" and refrain from using "unjust or unreasonable" business practices. The goal is to prevent providers from striking deals with content providers like Google, Netflix or Twitter to move their data faster.

Today is a red-letter today for Internet freedom.

"Today is a red-letter today for Internet freedom," said FCC Chairman Tom Wheeler, whose remarks at Thursday's meeting frequently prompted applause by Internet activists in the audience.

Verizon saw it differently, using the Twitter hashtag #ThrowbackThursday to draw attention to the FCC's reliance on 1934 legislation to regulate the Internet.

Net neutrality is the idea that websites or videos load at about the same speed. That means you won't be more inclined to watch a particular show on Amazon Prime instead of on Netflix (NFLX) because Amazon.com (AMZN) has struck a deal with your service provider to load its data faster.

No Winners or Losers

For years, providers mostly agreed not to pick winners and losers among Web traffic because they didn't want to encourage regulators to step in and because they said consumers demanded it. But that started to change around 2005, when YouTube came online and Netflix became increasingly popular. On-demand video began hogging bandwidth, and evidence surfaced that some providers were manipulating traffic without telling consumers.

By 2010, the FCC enacted open Internet rules, but the agency's legal approach was eventually struck down in the courts. The vote Thursday was intended by Wheeler to erase any legal ambiguity by no longer classifying the Internet as an "information service" but a "telecommunications service" subject to Title II of the 1934 Communications Act.

That would dramatically expand regulators' power over the industry and hold broadband providers to the higher standard of operating in the public interest.

'Internet For the People'

"Despite the cable industry's best efforts to undermine our cause, we secured an open Internet, free from gatekeepers and corporate monopolies. We have an Internet for the people," said David Segal, executive director of Demand Progress, a progressive Internet activism group.

Industry officials and congressional Republicans fought bitterly to stave off the new regulations, which they said constitutes dangerous overreach and would eventually raise costs for consumers. The broadband industry was expected to sue.

"With years of uncertainty and unintended consequences ahead of us, it falls to Congress to step in," said Michael Powell, head of the National Cable and Telecommunications Association.

GOP lawmakers said they would push for legislation, although it was unlikely Obama would sign such a bill.

"Only action by Congress can fix the damage and uncertainty this FCC order has inflicted on the Internet," Sen. John Thune, R-S.D., chairman of the Senate Commerce Committee, said in a statement.

Differing Opinions

Complicating the issue is that not every broadband provider agrees on what should be done. Sprint (S), for example, has said it doesn't think the new regulations would hurt investment. AT&T, however, supports the less stringent rules previously in place by the FCC but which were struck down in court. On Thursday, a senior company official said the FCC had gone too far and could cause irreversible harm.

"Does anyone really think Washington needs yet another partisan fight? Particularly a fight around the Internet, one of the greatest engines of economic growth, investment, and innovation in history?" said Jim Cicconi, AT&T's senior executive vice president for external and legislative affairs.

The FCC says it won't apply some sections of Title II, including price controls. That means rates charged to customers for Internet access won't be subject to preapproval. But the law allows the government to investigate if consumers complain that costs are unfair.

Also at stake Thursday was Obama's goal of helping local governments build their own fast, cheap broadband. Chattanooga, Tennessee, and Wilson, North Carolina, have filed petitions with the agency to help override state laws that restrict them from expanding their broadband service to neighboring towns.

The FCC was considered likely to approve these petitions, which could set a precedent for other communities that want to do the same.

Nineteen states place restrictions on municipal broadband networks, many with laws encouraged by cable and telephone companies. Advocates of those laws say they are designed to protect taxpayers from municipal projects that are expensive, can fail or may be unnecessary.

 

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Other Theme Parks Ride High, but SeaWorld Is Still Sinking

February 26, 2015, 6:33 am

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Filed under: Company News, Earnings, Entertainment Industry, Travel Industry, Scandals and Lawsuits

Amusement parks and more lavish theme parks are doing great these days -- unless you happen to be SeaWorld Entertainment (SEAS). The marine life attractions specialist posted another disappointing quarterly report Thursday.

Revenue declined 3 percent to $264.5 million during the fourth quarter relative to the prior year's showing. A combination of a 2.2 percent decline in attendance and a 1.9 percent slide in the average amount paid to get into one of its gated attractions led to the year-over-year decline, partly offset by folks spending more once they were in the parks.

SeaWorld's adjusted net loss widened to 21 cents a share. Red ink isn't problematic or a surprise. This is a seasonal business, and SeaWorld historically makes more than enough money during the potent second and third quarters when schools are out to offset the deficits during the first and fourth quarters. However, the adjusted shortfall was far worse than the 11-cent-a-share deficit it posted a year earlier and the 16-cent-a-share loss that analysts were targeting.

Shrinking Fish in a Growing Ocean

SeaWorld and the rest of the industry appear to be passing ships. Other park operators are posting record revenue and attendance, but SeaWorld's going the other way. Attendance slipped 4.2 percent for the parent company of SeaWorld, Busch Gardens, and Aquatica for all of 2014, following a 4.1 percent decline in 2013.

The struggling park operator points to a smaller decline during its most recent quarter as a sign of improvement, but let's check out how the competition fared during the holiday quarter.

• Market leader Disney (DIS) experienced a 9 percent uptick in revenue at its parks and resorts subsidiary, pulling off a 20 percent spike in the segment's operating profit.
• Propelled by the runaway success of its Harry Potter expansion in Orlando, Universal parent Comcast (CMCSK) led the way with a blazing 30 percent pop in revenue at its theme parks.
• Regional amusement park giant Six Flags (SIX) posted quarterly results a week before SeaWorld. Revenue shot 19 percent higher on the strength of its Halloween and Christmas events.
• Six Flags peer Cedar Fair (FUN) also made the most of the holidays, with revenue soaring 16 percent. Six Flags and Cedar Fair have posted record results for five consecutive years.

The industry's looking pretty good. Scandal-ravaged SeaWorld, on the other hand, isn't doing so hot.

Saving Shamu

SeaWorld knows that it's in trouble, and it will take more than a new CEO to turn things around. Activists are clamoring for an end to orcas in captivity at its namesake parks, and what started with a small documentary that didn't make a lot of waves in its initial theatrical release two years ago has been a major reason that folks are staying away from SeaWorld.

SeaWorld wants to win back its good name. It announced during Thursday morning's earnings call that it will be rolling out a reputation-restoring campaign by April. It had better be effective, because SeaWorld itself appears to be scaling back on the new rides that park operators typically rely on to woo new guests. Outside of a new roller coaster at Busch Gardens Williamsburg, most of the additions across its parks in 2015 consist primarily of updating show environments.

They say that a rising tide lifts all ships, and while that appears to be the case for nearly all of the theme park operators, rising waters only make matters worse when there's a hole in your ship.

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

 

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Psychology on Order: How Restaurants Get You to Spend More

February 26, 2015, 6:57 am

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Filed under: Advertising & Marketing, Industry News, Food & Beverage, Restaurants

By CANDICE CHOI

NEW YORK -- You may think you're immune to transparent sales pitches like "Do you want fries with that?" But the tactics restaurants use to nudge you into spending a little extra may be subtler than you realize.

Here's a look at a few ways companies get you to spend (and eat) more than you intended.

Get the $ Out

Restaurant menus are a complicated mixture of psychology, art and sales pitches. No detail is too small to matter, right down to the dollar sign.

Greg Rapp, a menu consultant in California, says he advises restaurants and fast-food chains to leave those off when listing prices on a menu.

"Dollar signs remind people of money," Rapp said. "When you use dollar signs, your food looks more expensive."

Words Matter

Imagery and language can also make prices go down easier.

Florid descriptions for menu items can seem like parodies, but it's an effective way to make a fairly standard dish sound special.

So, you may balk at paying $19 for baked fish and the vegetable of the day, yet gladly pay that for "flaky cod marinated in our house sauce, served with country peas."

"The more you talk about it, the less it costs in the customer's head. The more value you're giving them," Rapp said.

Hand-Eye Coordination

The closer you are to something, the more likely you are to make an impulse buy.

It's why the areas by registers are so crowded with those little extras. If you walk into Starbucks (SBUX) for a $4 latte, the cafe can push up the value of that transaction by 25 percent just by getting you to grab a $1 tin of mints. So while nobody goes to Starbucks specifically for mints, a lot of people buy them.

By similar logic, Dunkin' Donuts (DNKN) began rolling out small display cases on front counters last summer that feature items like cookies and Danish pastries. The thinking is that you're more likely to get something to nibble on with your drink if it's practically in your grasp.

A classic example at fancier restaurants is the dessert cart. At the casual dining chain Seasons 52, servers bring out a tray of mini-desserts to show diners. Pitched as "Mini Indulgences," the method of presentation has pushed dessert sales higher than those of most other restaurants, said Aaron Allen, a restaurant consultant based in Orlando, Florida.

And over at McDonald's (MCD), apple pie dispensers are behind the registers where customers can see them. Jeff Stratton, former president of McDonald's USA, has said pie sales would fall dramatically if the dispensers were back in the kitchen.

Controlling the Choices

Sometimes the choices available will push people to spend more.

Sonic (SONC), for instance, used to offer two sizes for its shakes: a 14-ounce "regular" and a 20-ounce "large." In 2012, the drive-in chain revamped sizes; the "regular" became a "small" and the "large" became a "regular."

It then added a new 32-ounce "large," as well as a 10-ounce "mini." So the people who tend to automatically opt for a "large" were shifted up to a bigger, pricier size.

Consumers really do order much more food than they need, because it seems like a value to them.

Drinks are a particularly ripe area for what's known in the industry as "upselling" because people usually don't pay as much attention to their prices as they do for main dishes, said Kit Yarrow, a professor of consumer psychology at Golden Gate University and author of "Decoding the New Consumer Mind."

Paying 25 cents more for a bigger soda or fries seems like a no-brainer to most people, even if they would've been content with the smaller portion.

"Consumers really do order much more food than they need, because it seems like a value to them," Yarrow said.

Giving more choices also just increases the odds that something will appeal to people. That's not really as necessary for main dishes, which people will order regardless, but can push up sales of extras like appetizers or desserts.

"When you have eight appetizers on the menu versus six, you sell more appetizers with eight," said Eugene Lee, CEO of Darden Restaurants (DRI), which owns Olive Garden, while addressing concerns about the complexity of the chain's menu last year.

What's Next

In the future, that drive-through menu board might just try to read your mind. Or at least predict what you, in particular, might be tempted by.

Sonic CEO Cliff Hudson has said the chain is working on ways to have digital menu boards feature items based on the particular customer.

The tailored offerings would be possible over time with the help of the mobile app, which is set to launch this spring and would help the company keep track of what people like to order. Already, Starbucks says its email offers to customers with its apps are tailored based on past purchases.

 

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Market Wrap: Nasdaq Nears 5,000; S&P, Dow Fall With Energy

February 26, 2015, 8:47 am

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Filed under: Energy, Market News, Mergers & Acquisitions, Economic Indicators, Oil & Gas Industry

By Caroline Valetkevitch

NEW YORK -- The Nasdaq resumed its recent advance Thursday after deal news in the technology sector, while the Dow and S&P 500 slipped as energy shares sank with oil prices.

The day's move put the Nasdaq within just 12 points of the 5,000 mark, which it last hit in March 2000 along with its all-time high of 5,132.52 at the height of the dot-com frenzy. The Dow broke a two-day streak of record closing highs.

Among the top boosts for the Nasdaq and S&P 500 were shares of Avago Technologies (AVGO), which jumped 14.7 percent to $129.25. The company reached a deal to acquire Emulex (ELX) for $8 a share. Emulex shares surged 24.7 percent to $7.93.

After we had a difficult January and early part of February, earnings reinvigorated the rally and pushed [the market] higher.

Also among the day's top performers, Salesforce.com (CRM) shares climbed 11.7 percent to $70.24. The cloud software company reported quarterly earnings and raised its full-year revenue forecast.

After a sluggish start to the year, stocks have rebounded sharply in February. Both the Dow and S&P 500 are on track for their best monthly performance since October 2011, while the Nasdaq is on pace for its best month since January 2012.

"After we had a difficult January and early part of February, earnings reinvigorated the rally and pushed it higher," said Bruce Zaro, chief technical strategist at Bolton Global Asset Management in Boston. "Consumer and health care really surprised investors."

Energy shares led declines in the S&P 500 and Dow, with the S&P 500 energy index dropping 1.8 percent as U.S. crude oil futures fell 5.5 percent to settle at $48.17, pressured by rising inventories in the United States.

The Dow Jones industrial average (^DJI) fell 10.15 points, or 0.06 percent, to 18,214.42, the Standard & Poor's 500 index (^GSPC) lost 3.12 points, or 0.15 percent, to 2,110.74 and the Nasdaq composite (^IXIC) added 20.75 points, or 0.42 percent, to 4,987.89.

Broken Chain of Wins

The Nasdaq on Wednesday had broken a 10-day streak of gains.

S&P 500 earnings rose 6.8 percent in the fourth quarter, Thomson Reuters (TRI) data showed, up from a Jan. 1 estimate for growth of just 4.2 percent.

Apple (AAPL) shares gained 1.3 percent to $130.41. Apple sent out invitations for a March 9 event, about one month before the much-anticipated launch of the new Apple Watch.

Economic data was mixed. January U.S. consumer prices had the biggest drop since 2008 as gasoline prices tumbled, while weekly jobless claims climbed last week and durable goods orders rose last month. The deflation data could provide a cautious Federal Reserve the leeway to keep interest rates low for longer.

About 6.4 billion shares changed hands on U.S. exchanges, below the 6.8 billion average for the month to date, according to BATS Global Markets.

NYSE decliners outnumbered advancers 1,646 to 1,387, for a 1.19-to-1 ratio; on the Nasdaq, 1,522 issues rose and 1,192 fell, a 1.28-to-1 ratio favoring advancers.

The S&P 500 posted 41 new 52-week highs and 3 new lows; the Nasdaq composite recorded 125 new highs and 20 new lows.

What to watch Friday:

• The Commerce Department releases fourth-quarter gross domestic product at 8:30 a.m. Eastern time.
• The National Association of Realtors releases pending home sales index for January at 10 a.m.

 

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J.C. Penney Sales Rise on Higher Demand for Apparel, Jewelry

February 26, 2015, 8:52 am

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Filed under: JC Penney, Earnings, Retail, Apparel, This Built America

By Nathan Layne and Nayan Das

Department store chain J.C. Penney (JCP) reported a lower-than-expected quarterly adjusted profit as it discounted more during the holiday season and invested in store expansions.

The company's shares fell as much as 9.2 percent to $8.28 in extended trading Thursday. The stock has gained 53 percent in the past year.

J.C. Penney posted a loss of $59 million, or 19 cents a share, in the fourth quarter ended Jan. 31, compared with a profit of $35 million, or 11 cents a share, a year earlier. The year-earlier results included a one-time tax gain of $270 million.

Excluding items, J.C. Penney's earnings broke even on a per share basis, compared with the average analyst estimate of a profit of 11 cents a share, according to Thomson Reuters I/B/E/S.

The company, whose rivals include Sears Holdings (SHLD) and Macy's (M), said comparable sales at stores open more than a year rose 4.4 percent in the holiday quarter. Analysts had estimated a rise of 3.8 percent, according to research firm Consensus Metrix.

The Plano, Texas-based company said it expected same-store sales to grow 3-5 percent in the current quarter ended May, compared with market estimates for 3 percent growth.

Total net sales rose 3 percent to $3.89 billion, helped by higher demand for household goods, apparel and jewelry during the holiday shopping season.

Analysts on average had expected sales of $3.87 billion.

 

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Spring Clean Your Way Into Cash

February 26, 2015, 10:00 pm

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Filed under: Family Money, Personal Finance, Fast Money, iPhone, Clothing & Accessories

By Geoff Williams

Depending where you live, it may or may not look like warmer months lie ahead, but the calendar doesn't lie. If you're like a lot of people, you're already thinking about spring cleaning.

And, if you're like a lot of people, you're dreading it.

But keep in mind that spring cleaning doesn't have to be a complete pain in the neck. If you think about it strategically, you could make money the next time you pull out the vacuum, gloves and garbage bags. Here are four ways you could clean up while cleaning up.

Hold a garage sale. According to StatisticBrain.com, there are an average 165,000 garage sales -- or if you prefer, yard sales -- every week in the U.S., and if we were to pool all the profits, we'd have $4.2 million. Granted, on your own you probably won't get rich -- after all, the price of the average item sold at a garage sale is 85 cents. Still, it's a relatively cheap endeavor, other than your time. You can post a free ad on Craigslist or on sites like GarageSales.com.

You could also post your items on eBay (EBAY) or Amazon.com (AMZN), but if you're selling a lot of clutter, be prepared to lose some money on transaction fees and shipping costs. In other words, if you have a lot of stuff in your house that you think someone would pay good money for, but not much more than 85 cents an item, you're probably better off going with the garage sale.

Recycle for cash. You can do far more than recycle the aluminum cans or copper wiring you have lying around -- although that's a start. For instance, there's a company that may recycle your cellphone, tablet or MP3 player. EcoATM.com, for example, tells you where to find the nearest ecoATM, which looks like an ATM, and into which you can drop your device for an appraisal. If you have an old iPhone, for instance, the machine might spit out as much as $400.

"EcoATM takes over 5,500 devices, which means even old satellite phones and text pagers might be worth something," says Randy Erman, director of product marketing for ecoATM.

Or if you have an old musical instrument gathering dust in the basement, perhaps from your high school band days, you could check out Reverb.com, an online marketplace for musical instruments and gear. You have to do the selling, which means taking a photo of the instrument and listing the item online, and there's a 3.5 percent transaction fee. In any case, if you have a good instrument that you know you'll never use, it might be a smart move.

Sell your old house parts. Maybe you're renovating and replacing something in your home that isn't broken or bad -- just old -- and you want something new. Before throwing said item away, do some research.

Many house parts, including bathroom fixtures, appliances, cabinets, doors, an odd window and even scads of old switch plates and light fixtures can be sold or donated for reuse elsewhere.

"Many house parts, including bathroom fixtures, appliances, cabinets, doors, an odd window and even scads of old switch plates and light fixtures can be sold or donated for reuse elsewhere," says Bill Golden, an Atlanta-based Realtor with RE/Max.

This isn't just wishful thinking. There are websites that specialize in selling house parts, like HistoricHouseparts.com and Rejuvenation.com. So there may be a market for the old parts you're storing inside your house. Golden suggests selling them on Craigslist, or if you have enough items, possibly doing a yard sale, highlight in the ad that you have house parts. One of his clients did just that, which prevented her from actually having to have the sale.

"A lady who saw an ad for the sale featuring almost all house-part items bought [the] entire inventory for use in her rental properties. These things that used to be junk now often have increased cachet -- and value to you -- as they become part of green renovations," Golden says.

He adds: "It may go without saying, but your house parts will have greater value if there is some bulk there. Either a lot of different items or a good bit of one item."

Sell your stuff to a consignment or resale store. Some secondhand thrift shops will take your old clothes, CDs, DVDs, Wii games and so on, purchase them and resell them. If you don't feel like running a garage sale, it might be worth your time to stuff some items in a box and drive to a consignment or resale store.

People often interchange the terms, but there are key differences between the two. "Resale stores pay their customers cash on the spot to buy their gently used items, whereas consignment store customers wait weeks to get their money," says Jim Wollman, vice president of franchising for the Minnetonka, Minnesota-based NTY Franchising Co., the parent company of Clothes Mentor, a chain of more than 100 resale stores throughout the country.

You could, however, get paid far sooner than expected if you opt for a consignment store. You're paid after your merchandise sells, so if it sells quickly, you get paid quickly. Still, Wollman's point is correct -- with a resale store, you get your money immediately; with a consignment store, it may take awhile.

Exactly how much you get varies, and of course, all stores are different. Some focus on clothing, others sell sporting goods and some are all about selling used video games. If you go to a thrift shop, generally you're donating your used merchandise, but at least you'll get a tax deduction.

If it's not money you're after -- you just want to get that old stuff out your front door -- you could hire a professional organizer to help you clean your house, or you could call in a junk removal service. Either can easily set you back hundreds of dollars. But with any luck, even if you do hire professionals, maybe you can offset at least some of the cost by selling some items of your own. After all, you want to clean out your house, not your wallet.

 

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Universal Orlando Getting Bigger, Better, Wetter, Wilder

February 26, 2015, 10:00 pm

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Filed under: Company News, Walt Disney, Travel, Entertainment Industry, Travel Industry

Universal Orlando is hoping to make a big splash at its Florida theme parks. The Comcast (CMCSK) subsidiary submitted plans earlier this month to build a water park just south of the fourth hotel that it recently opened at the resort.

The proposed park's iconic centerpiece will be a tall volcano with waterslides running down it and paths that lead to a lazy river, a rapids ride and other watery diversions. Theme park rumor site Screamscape.com unearthed trademarks last month for names including Volcano Bay and WonderSea Island, likely coming into play when the still-unannounced park opens in a year or two.

Universal has been busy in Central Florida. It opened the Cabana Bay Beach Resort last summer, just as it was breaking in the ambitious Wizarding World of Harry Potter expansion at Universal Studios Florida. Late last year it announced that a fifth resort hotel -- Sapphire Falls -- would be going up next year between the resort's third and fourth hotels.

Universal in Motion

Comcast's NBCUniversal already owns Wet 'n Wild, a water park a couple of blocks away from the heart of Universal Orlando. Screamscape.com speculates that Comcast may close Wet 'n Wild when the on-site water park opens, paving the way for a sixth resort hotel to be built on that site.

Themed Entertainment Association estimates that 15.2 million people visited Islands of Adventure and Universal Studios Florida in 2013, up sharply from the 10.2 million turnstile clicks generated in 2009. The major growth catalyst was the 2010 opening of Islands of Adventure's Wizarding World of Harry Potter, resulting in a 30 percent surge in attendance at that park that year.

Just a dozen miles away we find Disney (DIS) setting Disney World attendance records. The family entertainment giant doesn't post attendance figures, and Themed Entertainment Association is a few months away from publishing its industry estimates for 2014. However, the 2013 estimate is that combined attendance at Disney World's four theme parks clocked in at 50.1 million, up nicely from the 47.5 million guests the parks entertained in 2009.

Compare 15.2 million turnstile clicks at Universal Orlando's two parks to the 50.1 million guests entertained at Disney World in 2013, and one would think that Mickey Mouse has nothing to worry about, but let's not forget the 2009 attendance figures. Universal has gained 5 million guests in four years to Disney's 2.6 million, and that's with just half as many parks. It wouldn't be a surprise if Universal Orlando narrowed the gap again in 2014 with the wildly successful Harry Potter expansion.

It's not just the bar-raising attractions that Universal Orlando has been adding that should worry Disney. Between the 1,800-room Cabana Bay that opened last summer and the 1,000-room Sapphire Falls opening next year, we will see Universal Orlando's on-site hotel capacity go from 2,400 to 5,200 rooms.

Disney Needs to Get Serious

With Universal Orlando more than doubling its on-site rooms, upgrading its attractions and now ready to become a more all-inclusive destination with an in-house water park, Disney should be quivering underneath its mouse ears. It has been phoning it in when it comes to new park attractions, which the attendance figures show haven't been as magnetic as what Universal is up to these days.

Disney has reportedly spent more than $1 billion on its experience-enhancing MyMagic+ platform, but cutting-edge in-park technology isn't what will keep guests from straying to see what its neighbor is doing.

Help is on the way. A "Frozen" ride is coming to Epcot's Norway pavilion in 2016, and Animal Kingdom's "Avatar"-themed area will open in 2017. Disney is widely expected to announce "Star Wars"-themed attractions at Disney Hollywood Studios. However, even as Disney is refreshing its parks, we find Universal Orlando building up a still-unannounced attraction widely expected to be King Kong-themed.

Disney can no longer take pixie dust for granted, even as it gears up for yet another price hike. The competition is real -- and it's getting closer.

Motley Fool contributor Rick Munarriz owns shares of Walt Disney. He also operates a few theme park-related websites. The Motley Fool recommends and owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. Bring the magic of dividends to your portfolio: Check out our free report on our favorite high-yielding dividend stocks.

 

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How Men Buy Groceries - and How Stores Are Taking Note

February 26, 2015, 10:00 pm

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Filed under: Food & Beverage, Spending

By Krystal Steinmetz

Men and women are different, certainly when it comes to what they put in their grocery shopping carts. While women's carts tend to be packed with produce, snacks and sweets, men's baskets tend to contain more meat and booze.

That's according to the new Food Shopping in America study, conducted by The Hartman Group and food and nutrition marketing agency MSLGroup. The study revealed that men are doing more grocery shopping than before. In fact, men now make up 43 percent of primary shoppers.

On average, Americans do some type of grocery shopping three times a week, whether online or at convenience stores, mass merchandise or grocer stores, or other venues. The study revealed that men and women are doing the same amount of grocery shopping, which is a marked change from past years.

Men and women grocery shop in different ways. While many women browse, "men prefer to simply 'search and retrieve' the few items they need," the study said. Because convenience is important, men also tend to shop at club, convenience and online stores. Men are less price-sensitive, while women tend to scout for the best deals.

Going After the Male Shopper

"Don't mistake their lack of planning for lack of caring or think they are willing to accept items of lesser quality with higher price tags," says Laurie Demeritt, president of The Hartman Group. "To engage with male shoppers, brands and retailers should offer tools and services to help them quickly and effortlessly locate and buy items."

Many food brands are now taking note of the male shopper, who has been mostly ignored in the past. According to The Washington Post, some brands are introducing flavors that they hope will appeal to the male taste buds. "Kraft updated some products [in 2014] to make them palatable to millennial men, adding a Hot Habanero flavor of sliced cheese and a Chipotle flavor of its Planters peanuts. Campbell's has added a Beer-n-Cheese with Beef & Bacon flavor Chunky soup to appeal to the bold tastes the company says it has found men prefer. ... Ball Park launched Park's Finest, a new line of premium hot dogs that includes strong flavors such as Cracked Dijon Mustard and Slow Smoked Hickory. The company has dubbed its target customer "the grill-master guy," a confident, savvy chef who takes great pride in his skills behind the grill."

The study's definition of the male shopper fits my husband to a T. He only goes to the grocery store with a list (usually created by me), and he comes home with those items and nothing more. I often give him grief because he purchases more expensive product brands than I do when I shop. His argument: that he buys the first product he sees, without checking its price. Needless to say, I do 95 percent of the grocery shopping in our house.

Men, do you think your habits fit with the study's findings? Share your comments below or on the Money Talks News Facebook page.

 

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