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Stocks Owning Nuclear Plants Could Present Opportunity...
by: Analytical Chemist March 27, 2011 

Two weeks ago a magnitude 8.9 earthquake struck off the coast of northern Japan. The earthquake, combined with the resulting tsunami caused terrible devastation, with over 10,000 dead as of the latest reporting. In the US, though, the predominant news coverage after the initial impact has been on the Fukushima Daiichi nuclear power plant.

Since both primary and backup power were knocked out, there have been a series of problems with the nuclear reactors, damaging them to the point that when the nuclear reaction has eventually cooled, the entire facility will have to be scrapped.

This has caused a worldwide conversation on the use and safety of nuclear power. Germany has shut down 7 of its 17 nuclear reactors, and has begun plans to accelerate the shutdown of all remaining power plants. In the US, to my knowledge no reactors have been shut down, but at least one power purchasing agreement that was in the works between CPS Energy and NRG Energy (NRG) has been called off.

Although nuclear power is the most cost effective carbon-neutral form of power production, and has shown over decades of real-world use to be significantly safer than using coal, oil, or natural gas, the recent events at the Fukushima Daiichi power plant have focused a spotlight on the dangers on nuclear power.

Curious about what companies in the United States use nuclear power, I compiled what I believe to be a comprehensive list of companies that own or operate nuclear power plants in the United States.

The list of nuclear power plants was obtained from the Nuclear Energy Institute (NEI). To determine the amount of nuclear power generation, the companies web sites and annual reports were consulted, and checked against the list compiled by the NEI. I used company figures from their web sites and annual reports to obtain total power generation capability numbers, and where possible checked the calculated percentage of nuclear power.

Where possible, I used the maximum generating capacity figures, rather than the particular mix used in a given year, or by sales to customers. Additionally, not all plants were owned and operated by the same company. Where possible, I used the larger figure of operating capacity and owned capacity. This is a better way to characterize the maximum possible liability for each company.



Although I don't have space to talk about each company on this list, I have a short description of the 5 companies with the greatest dependence on nuclear energy here. I also have a few notes on some of the other companies below. Remember, the US as a whole gets 20% of its electricity from nuclear power.

Berkshire Hathaway (BRK.A) is on this list because it is owns MidAmerican Energy (MDPWK.PK). MidAmerican Energy generates only 6% of its electricity from nuclear sources. Additionally, MidAmerican Energy itself represents only 8.7% of total Berkshire revenues, so Berkshire's total investment in nuclear power is a very small percentage of its total business.

The largest generator of electricity overall is Southern Company (SO) at about 43 gigawatts (GW), but it actually has a below average nuclear proportion of only 15%. And the largest generator of nuclear power overall is Duke Energy (DUK), which owns or operates 14 nuclear reactors with a total electricity generation capability of nearly 7 GW. But the highest percentage of power generated by nuclear power plants is found at Exelon (EXC), with 93% of its power generation coming from nuclear plants. Exelon is the purest stock investment for those bullish on nuclear power.

NextEra Energy (NEE) is known for being the largest generator of solar energy in the country, and advertises that 95 percent of its power generation "comes from clean or renewable fuels." Its seven solar facilities total only 310 MW of electric capacity. This is dwarfed by its nuclear generation capability of 2554 MW, which represents about 14% of its total generating capacity. It also possesses large hydroelectric and wind power facilities. NextEra Energy is a possible attractive investment for those betting on non carbon-based sources of electricity.

One company not in the list that is a partial owner of several nuclear reactors in the United States is the French firm Electricité de France (Euronext Paris: EDF). I didn't include it on the list because it doesn't appear to be traded on any U.S. exchanges, though it is down more than 5% since the earthquake in Japan. I also didn't include any municipalities or local or regional power authorities with an ownership stake in nuclear reactors.

Nuclear power accounts for 20% of all electricity production in this country, and I hope you find helpful this list of companies owning or operating nuclear power plants. I was somewhat surprised that many of these stocks have not fallen in value very much; I was looking for opportunities to buy a beaten-down sector but didn't find the sector particularly beaten-down. I hope you find it useful as a reference.

[setravis]

The 5 Companies Most Dependent on Nuclear Power...

The difficulties in the aftereffects of the earthquake and resulting tsunami that hit Japan on March 11 have brought issues of nuclear safety to the world's attention. Germany, which had used nuclear power for 22% of its electricity, has already shut down seven of it 17 nuclear reactors, and plans to accelerate the shutdown of the remaining reactors. CPS Energy has cancelled its power purchase plan with NRG after NRG announced that the construction of two nuclear reactors would be slowed. I believe this is an overreaction, and wanted to look at some utilities with significant nuclear power production.

I recently compiled a list of the publicly-traded power generation companies and the percentage of their electricity generated by nuclear plants. Five of these companies depend on nuclear power for more than 30% of their total power generation. Where possible, I used the maximum generating capacity figures, rather than the particular mix used in a given year, or by sales to customers. Also where possible, I used numbers from power plants operated by the company, although if this number was smaller than the ownership, I used the larger of operating capacity and owned capacity.

The company most dependent on nuclear power in the U.S. is Exelon (EXC). Nuclear power plants produce 93% of its 31,000 MW power generation. It owns and operates nine nuclear plants, operates but does not own two other nuclear plants, and has one nuclear plant that it owns but does not operate. The operator in that case is PSEG Nuclear, a subsidiary of Public Service Enterprise Group (PEG). PEG, oddly enough, owns one of the two plants that Exelon operates but does not own. MidAmerican Energy, a subsidiary of Berkshire Hathaway (BRK.B), owns the other.

Exelon is making a strong push for more nuclear generation, including starting a series of upgrades to its nuclear plants in 2009 that are designed to increase power generation by 1300-1500 MW, equal to one new nuclear plant. Since the earthquake in Japan, Exelon has fallen 5% from $43.16 to $41.01 (all prices as of close on March 24). For comparison, the S&P 500 has risen about 0.4% in that time.

Next on the list of most dependent companies on nuclear power generation is the rural utility Central Vermont Public Service (CV). It claims to be the only Vermont company traded on the NYSE, and generates 54.5% of its electricity from nuclear sources, 38.4% from hydroelectric sources, 3.6% from wood (wood!), and 0.1% from CVPS CowPower, the nation's first "manure-to-energy program." It also made Forbes 100 Most Trustworthy Companies in America, and tied for second place on that list among publicly-traded small-cap companies. Central Vermont Public Service is actually up 1.7% to $23.49 from $23.09 since the Japanese earthquake.

Third on the list is the El Paso Electric Company (EE), an electric company providing power to western areas of Texas and southern New Mexico. 38% of its electricity is generated by the Palo Verde Nuclear Generating Station, which is jointly owned by seven companies and municipal power agencies. El Paso Electric Company stock is up about 4.3% over the last two weeks, from $28.63 to $29.85.

Constellation Energy (CEG) receives 32% of its electricity generation from nuclear sources, good for the fourth-highest percentage. Constellation operates and owns five nuclear reactors at three sites in Maryland and New York. The Long Island Power Authority and Electricité de France (EDF) are co-owners of the reactors. CEG is down 4.1% to $31.11 from its $32.45 close on March 11.

Lastly, Pinnacle West (PNW) like El Paso Electric, partially owns the Palo Verde Nuclear Generating Station. The Palo Verde Nuclear Generating Station represents 31% of the electricity generation capability of all power plants that Pinnacle West has ownership stakes in. It stock is down 3.4% from $43.56 to $42.10 since March 11.

CV and EE are the two lowest-capitalization public corporations that own or operate nuclear power plants. It is perhaps not surprisingly that these stocks have not been as affected by the coverage of the continuing problems faced at the Fukushima Daiichi power plant. I am, however, surprised that they have increased in value over the last two weeks. The other three stocks have fallen modestly, with Exelon having the greatest reliance on nuclear energy as well as the greatest drop in share price.

[setravis]

Harry Dent: "Major Crash" Coming for Stocks, Commodities Already Topping Out

http://finance.yahoo.com/blogs/daily-ticker/harry-dent-major-crash-coming-stocks-commodities-already-20110331-080715-415.html

The first quarter comes to a close today with major averages at or near multi-year highs. Expect "substantial" further gains for stocks before a "major top" occurs in late summer, says noted forecaster Harry Dent, founder of HS Dent and The Dent Method.

The good news, for those long, is Dent predicts the Dow will trade as high as 13,200 by mid-summer and the S&P 500 as high as 1430, or more-than 7% above current levels. The bad news is "then we could see another major crash," Dent says, forecasting the Dow could trade as low as 3300 in a worst-case scenario. "Bubbles go back to where they started or a little lower," he says. "The stock market bubble started at (Dow) 3800 in late 1994."

While Dent predicts the Dow's crash will play out over several years, he sees clear and present danger in gold, silver, oil and other commodities. "All investors should lighten up on or sell oil, silver, and gold as the U.S. dollar looks like it has bottomed and should rise ahead," he writes in the March issue of HS Dent Forecast.

In the accompanying video, Dent further explains his thinking for why commodities will stumble ahead of stocks, which is the opposite of what happened in 2007-08. In sum, he believes efforts by global central bankers to fight inflation — with the notable exception of the Fed -- will hurt growth in emerging markets as well as demand for many commodities.

As for the Fed, they are "checkmated," Dent says, suggesting the Ben Bernanke & Co. are damned if they do QE3 -- because the bond market will freak out -- and damned if they don't -- because the economy and financial markets are so dependent on easy money.

Stay tuned for additional segments to hear Dent's views on the economy, housing and the deflationary pressures detailed in his latest book The Great Depression Ahead, a bookend to his 1992 best-seller The Great Boom Ahead.

[setravis]

7 Problems That Could Derail the Global Recovery...
http://finance.yahoo.com/news/7-Problems-That-Could-Derail-usnews-491830938.html?x=0

At the beginning of the year, expectations for higher global growth in 2011 were high. Now, a string of unexpected events, like unrest in the Middle East and a devastating earthquake and tsunami in Japan, has cast a shadow over some of that optimism. In the United States, the housing market still looks weak and unemployment remains high. Add higher gas prices to the mix, and the outlook for global growth looks less rosy.

[In Pictures: 7 Problems That Could Derail the Economy.]

"The story really is how complex and interconnected the world economy is," says Jeffrey Cleveland, senior economist at money management firm Payden & Rygel. Here is a more complete list of events that could hinder the global economic recovery:

Rising commodity prices. Rising oil prices are on the minds of many consumers these days. The national average price of regular unleaded gasoline is $3.58, up 23 cents from a month ago, and 78 cents from a year ago as of March 29, according to AAA. Economists say gas prices are rising for two reasons: supply concerns in the Middle East and higher global economic growth expectations. Oil currently trades above $100 per barrel. Most economists say that once it reaches about $120, many consumers begin to change their driving habits. "But the key is it has to be a spike, and it needs to be sustained," Cleveland says.

[See 5 Reasons Investors Shouldn't Bail on Japan.]

Oil isn't the only commodity that's heading higher. In many emerging markets like China, India, and Brazil, soaring food prices have forced leaders to raise interest rates to quell inflationary pressures. Rising commodity prices also affect companies' bottom lines. "The biggest risk right now to the markets would be the compression in profit margins," says Brett Gallagher, deputy chief investment officer for Artio Global Investors. "Costs are rising faster than companies' abilities to pass those along." He's concerned that analysts haven't included higher commodity prices into their earnings forecasts.

Declining consumer sentiment. This month, the Thomson Reuters/University of Michigan consumer sentiment index fell 10 points to 67.5, its lowest level since November 2009. In a recent note, Theresa Chen, analyst at Barclays Capital, said: "We believe this is largely owed to increasing commodity prices, which puts pressure on household income and personal consumption."

Historically, consumer spending makes up about 70 percent of economic activity in the United States, and it has played a significant role in the recovery so far. "Consumer spending was a big part of that success story in the fourth quarter of 2010," Cleveland says. "Anything that derails that could be a problem."

The end of QE2. The Federal Reserve's $600 billion bond-buying program, commonly known as the second round of quantitative easing, or QE2, is set to expire in June. Once a buyer as big as the Fed exits the market, economists say they're uncertain who's going to step in to fill that gap. Before QE2, the Fed only purchased about 10 percent of the total treasuries in circulation, while private domestic purchasers bought about 40 percent and foreigners purchased the other half, says Madeline Schnapp, director of macroeconomic research at TrimTabs Investment Research. Now, about 70 percent of all purchases are made by the Fed, and 30 percent come from foreigners. That's a huge gap to fill, Schnapp says. She's worried that if no new domestic buyers emerge, interest rates could rise sharply. As the end of QE2 nears, she says, the Fed will be more clear about whether it will pursue another round of quantitative easing after June. "The market will begin to give you a hint about how it likes that decision probably about six weeks before the end of QE2," she says.

[See What Happens After QE2 Ends?]

Housing. A dramatic rise in interest rates could have ramifications for other parts of the economy, including the mortgage industry. The 30-year fixed mortgage rate currently stands at an historically low rate of about 5.1 percent, according to HSH.com, a publisher of mortgage and consumer loan information. Typically, lower interest rates spark more buying in the housing market, but that hasn't been the case this time around. "The combination of difficult-to-obtain financing, the very weak employment market, and a general sense of unease about how strong this recovery is coupled with home prices declining means there's very little incentive to rush out and go do something now," says Keith Gumbinger of HSH.com. In fact, last week new home sales plunged 16.9 percent to a record-low annual pace of 250,000 in February. The Standard & Poor's/Case-Shiller Home Price Index for January also showed that home prices fell for a sixth consecutive month. With such low demand, Gumbinger says a spike in interest rates could make an already bad situation worse. "A 6 percent interest rate in this market, or above 6 percent for a time, would be devastating," he says.

[See One Reason the Housing Bust Could End Soon.]

Unemployment. The unemployment rate still remains high at 8.9 percent. In February, the economy added 192,00 jobs, most of which were private sector jobs, which is encouraging news. Friday's highly anticipated jobs report could potentially bring better news. TrimTabs reported Wednesday that the economy created 293,000 new jobs in March. But the latest concern has to do with state and local governments. Many states are facing huge budget shortfalls, and politicians are calling for cuts. Employees of state and local governments (think teachers and firefighters) make up about 15 percent of the country's total employment, Cleveland says. "We've seen state and local governments shedding jobs since 2008, and I expect that to continue as they go through budget cuts," he says.

Sovereign debt worries in Europe. Portugal looks to be the next shoe to drop in the European debt crisis. Greece and Ireland have already taken bailouts from the European Union and the IMF, and economists say it's only a matter of time before the Portuguese government, which recently collapsed, will be forced to accept a bailout of its own. Portugal, like Greece and Ireland, is seen as a small economic player in the overall scheme of things. Economists say the real concern is that the crisis spreads to other areas of Europe. If a larger country like Spain, which recently had its debt downgraded by Moody's, was forced to take bailouts, the impact could be felt throughout the entire European Union. (Spain is the world's 12th largest economy.) "Spain is the Big Kahuna," Cleveland says.

[See The Case for (and Against) European Stocks.]

Japan fallout. The most obvious lingering question in Japan is what will happen with the damaged reactors at the Fukushima nuclear power plant. Otherwise, the most pressing long-term issue in Japan is its debt problems. The country's public debt-to-GDP ratio clocks in at 225 percent--more than three times as high as that of the United States. "We've been long worried about the amount of debt that the Japanese government has," Gallagher says. "They're going to have to borrow to rebuild, so it just compounds the longer term issue."

[setravis]

Most active Nasdaq-traded stocks
Nasdaq's 10 most active stocks at the close of trading

On Tuesday April 12, 2011, 6:03 pm EDT
NEW YORK (AP) -- A look at Nasdaq 10 most-active stocks at the close of trading:

Cisco Systems Inc. fell .2 percent to $17.44 with 62,758,500 shares traded.

Dell Inc. rose .7 percent to $14.70 with 19,500,100 shares traded.

Identive Group Inc. rose 113.9 percent to $5.69 with 33,802,800 shares traded.

Intel Corp. fell 1.8 percent to $19.76 with 51,170,800 shares traded.

Level 3 Communications Inc. fell 1.8 percent to $1.67 with 72,087,700 shares traded.

Micron Technology Inc. fell 2.0 percent to $10.53 with 41,918,800 shares traded.

Microsoft Corp. fell 1.3 percent to $25.64 with 36,177,100 shares traded.

Nvidia Corporation rose .3 percent to $17.37 with 20,890,900 shares traded.

Sirius XM Radio Inc. rose 1.7 percent to $1.81 with 30,935,800 shares traded.

Yahoo Inc. fell 1.4 percent to $16.36 with 19,557,400 shares traded.

[setravis]

A nice read...

How to Become a Millionaire in 3 Easy Steps
by Paul J. Lim and George Mannes
Monday, April 25, 2011

Remember that old Steve Martin joke about the secret formula for becoming a millionaire?

"First, get a million dollars ..."

Okay, getting the odometer on your investment portfolio to click over into seven digits isn't quite that easy. Only 7% of American households ever manage it, according to research firm Spectrem Group -- though it's certainly not for lack of desire.

While $1 million may not be worth what it was back when Martin was a wild and crazy guy in the late '70s, achieving that iconic number still has profound allure. It means that you're ahead of the game. You're assured a baseline retirement security. You've arrived.

Martin may have oversimplified, but the reality is that getting your portfolio to the $1 million mark is not nearly as difficult as you may think, even if you've managed to put away only a fraction of that amount so far. You just have to understand how to operate the three basic levers of wealth building: how much time you have to work with, how much you save, and how you invest that savings.

The slightest tug on one or two of these levers can dramatically affect your path to $1 million. Use our calculator to pinpoint when you're likely to become a millionaire based on your current situation and investing returns.

Lever 1: How Much Time You Allow

When you think about getting rich, what jumps to mind? Saving more money? Getting that money to work harder for you? Sure, those are critical elements. But they're not nearly as important as time: How long you allow dictates how you pull the other two levers -- which is why you want to estimate your schedule before going on to the next sections.

Sometimes you can't play with the time lever -- your kids will go to college when your kids go to college. But in certain cases, it's possible to control the clock.

Say you're now 45, want to retire at 62 with a million bucks, and have $250,000 saved. You've got 17 years. If you were saving $15,000 a year, adjusting for 3% inflation (meaning you put away $15,000 in year one, $15,450 in year two, and so on), and were able to earn 4% a year in real terms (7% before inflation), you wouldn't get there.

[Calculator: When will you be a millionaire?]
http://cgi.money.cnn.com/tools/millionaire/millionaire.html?iid=EL

But if you delayed retirement by just two years, you'd hit the mark. As Chris Dardaman, head of Brightworth, a financial planning firm in Atlanta, says: "It's not the end of the world if you can't save as much or invest as well as you want -- as long as you save and invest longer."

In part, how long it'll take to become a millionaire depends on where you are now. If you already have $500,000 saved, it might take only 10 to 15 years, in inflation-adjusted terms, provided you sock away $10,000 to $15,000 a year and your investments outpace inflation modestly.

But even if you're only a tenth of the way there -- like the typical worker who's been investing in a 401(k) for 10 to 20 years, according to the Employee Benefit Research Institute -- you can make it in two decades or less, if you save a good chunk of income or earn a decent return.

Of course, that's the dilemma. While the ability to save more is within your control, the ability to generate a certain return isn't 100% in your hands. And as your time horizon shrinks, so too will your ability to accurately predict how your investments are likely to perform. So let time determine which of the two other levers -- savings or investing- -- you pull harder.

If you want to get to seven figures in 10 years or less: Seriously ramp up savings

With only a few years to invest, there's a significant risk that even a seemingly safe investment strategy could fall short of your expectations, because of the wide range of possible outcomes.

For example, according to computer models run by Ibbotson Associates, a moderate 60% stock/40% bond strategy could result in annualized returns of as much as 16% over the next 10 years, but it could also result in worst-case losses of nearly 1% a year. While that gain would certainly speed things up, a sustained loss -- even a modest one -- could be devastating given your time frame.

So if your self-imposed deadline for achieving $1 million (or any financial goal) is tight, instead of banking on optimistic returns, you're better off trying to boost your savings as much as possible. Then invest in a balanced mix of 50% stocks and 50% bonds that can be expected to beat inflation by a modest two or three percentage points a year.

If you're willing to wait more than 10 years: Invest more aggressively

The longer you have to invest, the greater chance you give the market to smooth out any ups and downs. Back to that 60%/40% portfolio: Over 20 years, the annualized spread could narrow to gains between 2% and 14%. So you could even take on a little more risk -- increasing your equity exposure, say -- for the possibility of better returns.

The single most important thing you need to know about building wealth: You're far better off being a dogged saver who's a mediocre investor than being a below-average saver who can knock the socks off the S&P 500.

Lever 2: How Much You Save

"It's sort of like exercising," says Stuart Ritter, a financial planner with T. Rowe Price. "You can devise the most optimal splits between cardio and weight training. But if you only go to the gym for six minutes, it won't really help you that much."

Let's say you have 20 years to invest and $250,000 already amassed. You can see from the table at right that boosting your annual savings from a modest $5,000 to an aggressive $20,000 could increase your chances of hitting $1 million in today's dollars -- $1.8 million nominally in 2031 -- from 31% to 67%, assuming a 60% stock/40% bond portfolio. If instead you kept your savings rate the same but upped your stock allocation to 80%, your chances of success would be less than fifty-fifty.

Savings may be the safer bet, but it's often the tougher task. Here are four ways to crank up the amount you're banking per year, in ascending order of difficulty.

Easy: Use Other People's Money

You've heard this before, but it bears repeating: The simplest way to boost your savings is to max out your 401(k) match, since that's a hand-out from your employer. Say you make $100,000 and save 3% of pay. If you're eligible to receive 50 cents on the dollar for the first 6% of salary deferred a common match you'd be leaving $1,500 a year on the table.

Tax-advantaged accounts like 401(k)s and IRAs also allow you to build wealth faster, in that case by putting Uncle Sam's money to work for you. On the same salary, by contributing $10,000 annually to a 401(k), you'd immediately reduce your income taxes by $2,800, assuming you are single and in the 28% bracket.

For now you can think of it as saving the equivalent of $10,000 while ponying up only $7,200. But even after paying taxes at withdrawal, you'd still come out ahead in most cases thanks to tax-deferred compounding at a 6% annual return, you would be up by $1,600 a year if you'd been socking away $10,000 for 15 years.

(This is why we assume that you'll use tax-deferred accounts as well as tax-efficient investments such as index funds to avoid the drag of taxes on your returns.)

A Little Harder: Bump Up Savings Systematically

"The easiest way to save is to put as much of your savings on autopilot as you can," says Shlomo Benartzi, chief behavioral economist for Allianz Global Investors.

A decade ago he and University of Chicago economist Richard Thaler devised a 401(k) plan feature that allows workers to preset future contribution hikes -- that is, it lets them specify in advance how much they want to ratchet up savings. A 2007 study found that those who used this option boosted contribution rates from less than 4% to nearly 14% in about 3½ years' time. Those who didn't barely changed their deferrals.

Today half of large employers offer this type of feature, reports Hewitt Associates. If your company is among them, use the tool to step up contributions.

A $2,000 bump will feel like only $55 more per biweekly paycheck thanks to the tax benefit. And with the money tucked into savings, you'll be forced to adjust your spending. Your plan doesn't offer this option? Partner up with a co-worker, put a date on your calendars, and remind each other to call HR that day.

Harder Still: Live on Last Year's Budget

After the market crashed in 2008, retirees were commonly advised to forgo inflation-adjusting withdrawals on their nest eggs for a few years, to give their accounts time to heal. People who are working can adopt the same strategy with savings rates.

Say you earn $90,000 a year and save $9,000 of it. That means you "spend" $81,000 a year on discretionary items (such as entertainment and travel), non-discretionary items (mortgage, utilities), and taxes. Let's also assume your pay climbs 2% annually for the next five years. Your $90,000 salary will rise to more than $99,000. But if you were to increase your "spending" each year only enough to cover the additional taxes you'd owe, you'd be able to save an increasing amount every year -- for a total of $15,000 by year five.

The challenge here, and the reason this falls under "harder still," is that if inflation rises faster than the long-term historical average of 3% -- as some economists fear -- you'd really have to trim your spending.

This plan may not be feasible in any case if you have a medical condition, what with health care costs expected to continue outpacing income growth for the next several years.

Hardest: Boost Your Income

There's only so much you can save on a given salary. At some point, the limits of austerity (you have to buy new clothes sometime!) and the impact of inflation will make it impossible to squeeze more out of your budget. When that happens, your only option is to increase your income.

Landing a higher-paying job would be one way to up your income. But since that promises to be challenging in today's tight labor market, bringing in income beyond your full-time job may be a more optimal choice.

If you have the capacity to do consulting work in the evenings or on weekends, even a small project could help you boost yearly savings by $10,000 or so. Plus, this would allow you to save more tax-deferred: You could contribute 25% of freelance pay up to $49,000 to a SEP IRA.

You might go further by taking steps toward starting a small business while still employed a path about half of entrepreneurs have taken, says the Kauffman Foundation. Or, with housing prices down in most markets and mortgage rates near historic lows, you could take a calculated risk on real estate, investing in rental properties to boost income.

True, improving your investment results may not speed you to $1 million as quickly as jacking up your savings rate. But it can help.

Lever 3: How You Invest

Say your goal is to have a million in less than 20 years, that you have $250,000 put away and that you are taking great pains to save $30,000 a year. Even at that aggressive pace, you wouldn't hit your deadline if your portfolio simply kept up with inflation. However, if you earned a modest 1% a year after inflation, you'd get to the equivalent of $1 million today in 18 years ($1.7 million in nominal dollars). Every percentage point shaves off a little more time.

Of course, the strategies that promise the greatest potential returns also present the greatest potential for loss so you'll want to avoid serious long shots like buying manganese futures or trading the Thai baht. A few saner strategies, in ascending order of risk:

Safe Bet: Cut Your Costs

The returns you collect from mutual funds will always be hampered by the expenses you pay. Don't think reducing costs makes much of a difference?

At Money's request, Vanguard ran a series of simulations to see how various asset mixes are likely to perform over the next 20 years.

Turns out, a typical 60% stock/40% bond portfolio, charging 1.25% a year, has a great probability of generating at least 5% annually over the next two decades. At that rate -- assuming 3% inflation, current savings of $250,000 and additional contributions of $15,000 a year -- you'd get to a million in 23 years.

But if you were able to boost those returns to 6%, which you could do by reducing portfolio costs to 0.25%, you'd make it in 20 years.

You can easily create a 60/40 portfolio with an overall expense ratio under 0.25%. For example, put 40% in Schwab Total Stock Market Index (SWTSX - News) (expense ratio: 0.09%), 20% in Vanguard Total International Stock (VGTSX - News) (0.26%) and 40% in Vanguard Total Bond Market (VBMFX - News) (0.22%). All three are on the Money 70, our list of recommended mutual funds and ETFs.

Wondering if you couldn't achieve similarly positive results simply by picking better funds? Good luck consistently finding managers that will consistently outperform the market, says Thomas Idzorek, chief investment officer for Ibbotson Associates.

Less Safe Bet: Tilt Toward Small Bargains.

In this strategy, you would keep your overall stock-to-bond split the same. You'd just move some of your equity allocation out of big blue chips and into small-cap value stocks -- shares of small companies that are being overlooked or once-larger companies that have fallen on hard times and are selling at attractive prices.

Between July 1927 and the end of last year, the average small-cap value stock gained more than 14% annually, according to Ibbotson Associates, vs. 9.8% for the S&P 500.

It's not all roses, however: Such stocks tend to be more volatile than your garden-variety blue chip because they've either been battered or lack competitive advantage.

Also, there have been long stretches when they have been out of favor, such as the mid- to late 1990s. Finally, since these shares have returned nearly three times as much as the broad market over the past decade, it's hard to imagine they can keep churning out outsize gains -- at least in the short run.

But in the long term "there's no reason to believe small-cap values won't sustain their advantage," says Paul Merriman, founder of Merriman Capital Management.

So if you have at least two decades to invest, gradually shift small amounts from large-caps into small value through a fund like T. Rowe Price Small Cap Value (PRSVX - News), which is on the Money 70. Do so until the shares are a quarter of your equity allocation, and history says you'll see a real impact. Since the late 1920s, a 60% stock/40% bond portfolio with this small-cap value tilt returned 9.7% a year, while a traditional 60/40 index portfolio returned 8.7%. With that edge, in 25 years you'd turn $200,000 into $970,000 in today's purchasing power vs. $770,000 without the small-cap bent.

Riskier Bet: Step Up Your Stock Stake.

History shows that the simplest thing you can do to boost long-term investment performance is to dial up your equity exposure. Since 1926, the average 50% stock/50% bond portfolio gained 8.2%, according to Vanguard. Raising the stock stake just a bit, to 60%, would have resulted in annualized gains of 8.7%.

There's a trade-off, of course: The more you tilt toward stocks, the higher your chances of losing money in a single year. A 50/50 portfolio has lost value in 17 calendar years since 1926; a 60/40 has fallen 21 times; a 70/30 sank in 22 years; and an 80/20 dipped in 23.

You'll suffer the most if the market dives near the end of your time horizon, since you won't have a chance to recover. For example, if you entered 2008 the last year the market suffered losses -- with $1 million, you'd have had $798,000 at the end of the year with a 60/40 mix.

Were your portfolio instead invested at 50/50, your million would've ended up at $840,000. So even if you think you can handle a greater stock exposure now, be sure to reduce the percentage as you approach your goal date.

Riskiest Bet: Leverage Your Equities

Yale professors Ian Ayres and Barry Nalebuff think there's a problem with how we invest. When you're young and can tolerate being all in equities, you don't have much money. When you're older, you may want to be only 50% in stocks, but in dollar terms that dwarfs how much you had in the market in your youth.

Therefore, the duo have controversially posited that young investors -- those in their twenties and thirties -- should leverage their equity positions, sometimes by as much as 2 to 1. In other words, if you have $20,000 to invest, not only should all of that go into stocks, but you should borrow an additional $20,000 so you have $40,000 in equity exposure.

Ayres and Nalebuff crunched the numbers going back to 1871 and found that over a lifetime this strategy consistently beat the traditional 110-minus rule (where you subtract your age from 110 and put the resulting percentage in stocks). Their method resulted in accounts 14% larger, on average. Even in the worst case, their approach came out ahead by 3%.

These professors aren't talking about taking a flier on a single stock. They recommend investing in the broad market, which you can do using a margin account at your brokerage to buy an index fund or ETF.

Or you can leverage your bets through options contracts that give you the right to buy or sell an index, such as the S&P, in the future. You'd reduce your stock exposure as you age. In fact, the extra risk you take in your twenties and thirties would allow you to be even more conservative -- possibly keeping as little as 20% in equities -- toward the end of your career.

There are, of course, caveats: While the profs say that someone in his forties could still benefit by leveraging -- say, 1.2 to 1 -- older folks or those with a time horizon of less than 20 years should think twice about trying this strategy. Leverage will magnify any losses you suffer in equities.

And that could put you in dire straits if your brokerage issues a margin call, meaning it requires you to sell some of your holdings because your account value is too low. (This is also a risk for young people, but less dire.)

Finally, if you work in a volatile industry where your future income looks shaky, you can't afford this type of risk. But if you've got a stable job and decades to invest? It may just make you a million bucks.

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Sectors and Industries...

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Is a compilation of lists of stocks currently undergoing one of 34 technical or fundamental events likely to affect stock price. Outstanding performers ripe for inclusion in your portfolio or watch list.

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Underperformers ready for a tumble. If you like to play the short side...
Is a compilation of lists of stocks currently undergoing one of 34 technical or fundamental events likely to affect stock price.

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US stocks rise on hopes for new Greek aid package
Hopes for new Greek aid deal push stocks higher; sharp drop in consumer confidence pares gains


Stan Choe, AP Business Writer, On Tuesday May 31, 2011, 12:14 pm EDT
NEW YORK (AP) -- New hopes that a deal would be reached for Greece to avoid defaulting on its debts sent stocks higher Tuesday. The market gave up some of its gains following a surprise drop in U.S. consumer confidence.

The Dow Jones industrial average rose 70 points, or 0.6 percent, to 12,512 in midday trading. It had been up as many as 133 points earlier.

The Standard & Poor's 500 index rose 7 points, or 0.5 percent, to 1,338. The Nasdaq composite gained 16 points, or 0.6 percent, to 2,813. Crude oil and metals prices also rose.

The Conference Board reported that its monthly survey found that Americans are losing faith that the economy is improving. The surprisingly poor results were caused by worries about jobs and inflation. Economists had expected confidence to improve for a second straight month.

The weak report dented optimism among investors that Greece may be nearing a deal to get another package of financial aid from its neighbors in Europe. Germany may back off its push for an early restructuring of Greek bonds, a shift that would help Greece get more aid, according to a report from the Wall Street Journal. Many European banks hold Greek government bonds and could suffer losses if the country restructures its debt.

Fears that Greece may not receive its latest installment of emergency loans knocked stocks lower over the past month. The Dow Jones industrial average has dropped four straight weeks, its longest losing streak since February 2010. Investors worry that if Greece defaults it could cause traders to shun the debt of other weak European countries like Portugal and Spain, raising their borrowing costs and causing more havoc on world markets. Greece received a package of emergency loans a year ago but it has become clear in recent weeks that the country will still need more help.

Ashland Inc. rose 10.2 percent after saying it will buy Specialty Products Inc. for $3.2 billion in cash. It's the latest big purchase in the specialty chemicals industry. Earlier deals include Berkshire Hathaway Inc.'s $9 billion purchase of Lubrizol Corp., announced in March. Corporate dealmaking, along with strong earnings, helped propel stocks earlier in the year.

Canadian utility Fortis Inc. said Monday that it will buy Central Vermont Public Service Corp. for about $470 million in cash. Shares of Vermont's largest utility rose 41 percent Tuesday, their first day of trading since the announcement. U.S. markets were closed Monday for Memorial Day.

General Dynamics rose 4.4 percent after it said it received a $744 million contract to build two ships for the U.S. Navy.

Energy stocks rose along with the price of oil. Crude futures climbed $2 to top $102 per barrel. Cabot Oil & Gas Corp. rose 2.3 percent.

Investors mainly looked past another grim report on the U.S. housing market. Home prices in in 12 of the 20 cities tracked by the Standard & Poor's/Case-Shiller index dropped in March to the lowest levels since the housing bubble popped in 2006. "Home prices continue on their downward spiral with no relief in sight," said David Blitzer, chairman of the index committee at S&P Indices.

Oliver Pursche, president of Gary Goldberg Financial Services, said the report didn't hurt investors' confidence much because their expectations were so low for the U.S. housing market already.

"There's no shock factor there," Pursche said. "We knew it was going to be bad, and it is."

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5 Tax Rip-Offs...

From Social Security benefits being taxed to the AMT, here are unfair tax rules that should be repealed.

The ever-growing federal budget deficit and ongoing recession finally may force Congress to initiate meaningful federal income tax reform. Here are five tax rip-offs that should be fixed.

Employees Can't Deduct Health Premiums

If you're an employee who has to pay for your own health insurance, you don't get any tax write-off unless your company provides a cafeteria benefit plan. Many small and medium-sized companies don't, forcing their employees to pay health premiums with after-tax dollars. Meanwhile, employees with better benefit packages get tax-free company-paid health coverage, and self-employed folks are allowed to write off their health insurance premiums.

Renters Get No Tax Breaks

Homeowners are allowed to claim tax deductions for mortgage interest and property taxes. If they sell their homes for a profit, they can usually avoid paying any federal income tax on gains up to $250,000 or $500,000 for married couples. If they make energy-saving home improvements, they can claim tax credits. In contrast, renters get no tax breaks whatsoever.

The solution is not to give new tax breaks to renters. The solution is to repeal tax breaks for homeowners. Ouch.

The Alternative Minimum Tax (AMT)

The AMT was originally conceived as an alternative individual income tax system that forced super-high-earners who took unfair advantage of multiple tax breaks to pay at least some federal income tax. I have no problem with that concept. But over time, the AMT has morphed into a tax that mainly penalizes middle-income folks, who have lots of kids and pay lots of state and local taxes. To avoid ruffling the feathers of a large number of voters, Congress tweaks the AMT rules every year to prevent millions more from getting hit with the tax.

So why not just repeal the AMT and be done with it? Because the politicians want to keep it around as a backup revenue source -- just in case.

Social Security Benefits Are Taxed

When you start receiving Social Security benefits, you will discover the sad truth that between 50% and 85% of your payments might get hit with federal income tax (the taxable percentage goes up with your income). That's a big rip-off for two reasons.

First, you already paid Social Security taxes in the form of withholding from your salary. So now you are paying income tax on benefits based on a tax you paid years ago. Even worse, you already paid income tax on those Social Security taxes years ago, because they were included as part of your taxable salary. Bottom line: you get taxed twice on a tax. That is triple taxation folks. Thankfully, retirees who are at very low income levels don't have to pay the triple tax, but everybody else get socked.

Is this unfair? Of course. But Congress likes the revenue stream, so the problem is not going to get fixed until millions of Social Security recipients demand it.

Retirement Account Required Minimum Distributions

Do you have money in an IRA or 401(k) account? Once you turn age 70 , you must start taking annual required minimum distributions (RMDs). Guess what? Those RMDs are taxable, which is why Congress dreamed up the RMD rules in the first place. The politicians want to get their hands on some of your retirement account money sooner rather than later. If that means you don't have enough to live on, too bad.

President Obama has floated the idea of making up to $50,000 of retirement account balances exempt from the RMD rules. Good idea, but it doesn't go far enough. Let's just repeal the RMD rules and be done with it. Seniors should be allowed to keep their hard-earned retirement savings out of the government's hands.

Finally, lest you think otherwise, this column was not written from any particular political perspective. All the things I rant about have been around for years - during periods when both Republicans and Democrats have been in control. Bad tax policy is bad tax policy regardless of one's political affiliation. We need to start demanding an Internal Revenue Code that collects taxes in an efficient and transparent manner. What we have now falls far short on both counts.

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Just What You Needed: Higher Taxes...

While you hear a lot about the federal income tax, you don't hear much about the Social Security tax. That's odd because for many folks especially the self-employed Social Security tax can be the bigger hit. Here are some little-known truths about how the Social Security tax works and how much it can amount to.

As an employee, your wages are hit with the 12.4% Social Security tax up to the annual wage ceiling. Half the Social Security tax bill (equal to 6.2%) is withheld from your paychecks. The other half is paid by your employer. Unless you understand how the tax works and closely examine your pay stubs, you may be blissfully unaware of how much the Social Security tax actually costs.

The Social Security tax wage ceiling for both 2010 and 2011 is $106,800. If you made that much or more last year, the Social Security tax hit on your 2010 wages was a whopping $13,243 (12.4% x $106,800). Half came out of your paycheck. Your employer paid the other half.

For 2011, the tax hit is less, thanks to a one-year 2 percentage-point reduction in the Social Security tax withholding rate on wages -- from the normal 6.2% to 4.2% (your employer's 6.2% rate is unchanged). For 2012 and beyond, however, Social Security tax withholding on your wages will jump back to the standard 6.2% rate.

While many employees may not realize the magnitude of the Social Security tax, self-employed folks know it all too well. That's because the self-employed must pay the entire 12.4% tax rate out of their own pockets, based on the amount of their net self-employment income. This is one big reason why companies often prefer to treat workers as self-employed independent contractors rather than employees. Companies don't owe any Social Security tax on amounts paid to independent contractors.

For both 2010 and 2011, the Social Security tax self-employment income ceiling is $106,800 (same as the wage ceiling for employees). So if your 2010 self-employment income was $106,800 or more, you paid the Social Security tax maximum of $13,243 last year (12.4% x $106,800 = $13,243).

In 2011, the hit will be less thanks to a one-year 2 percentage-point reduction in the Social Security tax rate on self-employment income -- from the normal 12.4% to 10.4%. For 2012 and beyond, however, the Social Security tax on self-employment income is scheduled to return to the standard 12.4% rate.

To give you an idea of how the Social Security tax can add up over your working life, consider my personal situation. In 35 years behind the grindstone (about half as an employee and the other half self-employed), I've paid $219,000 in Social Security tax. My employers paid another $41,000. That amounts to $260,000 in total. During my time as a self-employed guy, I've had some years where my Social Tax bill exceeded my combined federal and state income tax bills.

Believe me, if I could get the $260,000 back, stop paying the tax, and forego receiving any benefits, I would do it in a heartbeat. In fact, if I could just stop paying the tax in exchange for walking away from any future benefits, I would do that too. Why? Because I have big doubts I will actually receive the promised level of benefits when the time comes.

And thanks to the government's official contention that there has been little to no inflation over the past few years, the Social Security tax ceiling has been stuck at $106,800 since 2009. However, the latest Social Security Administration projection says it will start rising again in 2012 and beyond. The projected ceilings for the next nine years are as follows.

If these numbers pan out, the maximum Social Security tax hit in 2020 would be $19,009 (12.4% x $153,300). That's assuming Congress doesn't increase the tax rate, which could easily happen. There's also a chance the ceiling will be increased beyond what you see here or even entirely removed in an attempt to put the system on a sounder financial footing. If there's no ceiling, you would owe Social Security tax on wages and self-employment income on every dollar you earn.

Another misunderstanding about Social Security: Some people think the government has set up an account with their name on it to hold the money to pay for their future Social Security benefits. After all, that must be where all the Social Security taxes on people's wages and self-employment income go, right? Wrong. There are no individual accounts. In fact, when the Social Security system runs a surplus (which it has in most years until now), the federal government sucks out the excess cash and issues the system an IOU. But the only way those IOUs will ever be paid is through future taxes. Meanwhile, the system is now projected to run out of money (including those nebulous IOUs) in 2036 unless taxes are raised or benefits are cut.

Projected Social Security Tax Celing

2012 -- $110,700

2013 -- $114,900

2014 -- $120,000

2015 -- $125,400

2016 -- $130,800

2017 -- $135,900

2018 -- $141,300

2019 -- $146,700

2020 -- $153,300

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Why No Jail Time for Wall Street CEOs?
by David Weidner
Wednesday, June 1, 2011


Commentary: Little reason to hope that justice will be served

NEW YORK (MarketWatch) — It's probably the most asked question to come out of the financial crisis: why aren't any Wall Street CEOs in jail?

It's asked on the message boards, over dinner, in the media, in Washington and in schools. Most people shrug and agree, someone important — Lloyd Blankfein at Goldman Sachs (NYSE: GS - News), Stan O'Neill, formerly of Merrill Lynch & Co., or Dick Fuld, the former CEO of Lehman Brothers — should go to jail, right?

A lot of us have tried to answer this question. Joe Nocera at the New York Times wrote in February that prosecutions were unlikely because "delusion is an ironclad defense." .

More recently, Roger Lowenstein, writing for Bloomberg BusinessWeek, concluded "risk-taking and stupidity aren't criminal." Lowenstein's argument won praise from the Times' Andrew Ross Sorkin who tweeted that Lowenstein was "probably right."

Finally, Bill Black, the University of Missouri at Kansas City law school professor, and one of clearest-thinking minds on culpability in the financial crisis, wrote a blistering takedown of both Lowenstein and Sorkin on The Big Picture blog by quoting their previous writing on Wall Street against them. In Sorkin's case:

"If the government spent half the time trying to ferret out fraud at major companies that it does tracking pump-and-dump schemes, we might have been able to stop the financial crisis, or at least we'd have a fighting chance at stopping the next one."

Taking down the 'Don'

The upshot of these assessments of legal culpability seems to be that while a successful prosecution may have long odds, it's probably worth doing. Indeed, the Financial Crisis Inquiry Commission and the Senate Investigations Subcommittee report on Wall Street, the Levin-Coburn report, both suggest further investigations are in order.

"It is possible for certain senior executives at major financial firms and banks to be held liable for the credit crisis," said Michael Chester, a partner at Skarzysnki Walsh & Black. "However, putting together a successful case will likely be much more problematic than most realize."

For one, regulators just haven't been keeping up, Chester said.

"Traditionally, these agencies have always amassed large amounts of information to use in subsequent criminal prosecutions. However, statistics show that these agencies have referred fewer financial cases to the U.S. Department of Justice in recent years."

Also, a ruling in the case against former Enron Chief Executive Jeff Skilling about the "honest services" statute now strictly applies to bribes and kickbacks, Chester said.

Moreover, the statute of limitations has run out on a lot of securities law claims, said Max Gardner, a consumer advocacy lawyer who's been working in the foreclosure space. He adds that it's difficult to pursue claims against securities sold by the banks these CEOs ran, because common-law fraud claims require a showing of intent.

"There's also the representations and warranties in the securitization documents themselves, including that there is good title to the mortgages and that they're not in default," he said. ""It's important to emphasize, however, that there could be suits against mortgage-backed securities sponsors, MBS servicers, and MBS trustees."

But those targets are admittedly below the executive suite for which we're aiming. It's hard, but not impossible, to believe those CEOs didn't know how reckless their standards had become on the mortgage and securitization front. Again, the Coburn-Levin report suggests there are some smoking guns that could link high-level executives who testified that they just didn't know what was happening.

Even if there was evidence enough to build a case, it probably wouldn't satisfy us.

"For those who sold financial products that misrepresented their credit worthiness, how far up the chain do you want to go?" asked Brian Greenberg, an accountant and investor based in Marlton, N.J. "Do you want to take down the 'Don'?

"In that case start with the Federal Reserve that made credit plentiful and cheap without any regard to creditworthiness of the buyer. If their excessive policy of pushing cheap money did not exist, then Wall Street would not have been able to push the 'junk' to the kids — er, public."

Greenberg makes a fair point. There's a lot of blame to go around.

It's the ability to mete out punishment that has its limits.

David Weidner covers Wall Street for MarketWatch.

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Can't stand 4 more years of this PRESIDENT



Government May Lose $14 Billion on Auto Bailout ...
JUNE 1, 2011, 5:16 P.M. ET

WASHINGTON—The White House said Wednesday that taxpayers could lose roughly $14 billion of the money spent on auto industry bailouts, despite the industry's recent recovery.

The White House cites the potential losses in a report, "The Resurgence of the American Automotive Industry," released ahead of President Barack Obama's trip Friday to a Chrysler Group LLC facility in Toledo, Ohio.

The report said that of the $80 billion in bailout money supplied to the auto industry, less than 20%, or $16 billion, ultimately may be lost. That's down from the 60% loss projected two years ago, the report said. The White House's top auto and manufacturing adviser, Ron Bloom, later specified the loss at closer to $14 billion.

While "there is no joy" in acknowledging that loss, the bailout succeeded in saving jobs and preventing a broader industry collapse, Mr. Bloom said.

"So while we are obviously extremely conscious of our obligation to get every penny we can for the taxpayer, we're also not going to apologize for the fact that there are literally hundreds and hundreds of thousands of Americans who are working today" because of the bailouts, he said.

The U.S. could lose more than $10 billion in General Motors Co. alone if the government sold its remaining shares of the auto maker at current share prices.

The Obama administration has signaled it wants to divest its remaining GM shares within the next few months. Under terms of GM's November initial public offering, the U.S. Treasury could begin selling additional shares of its GM holdings as of late last month. Mr. Bloom said Wednesday the administration has not settled on a price or date for selling its remaining shares, but said the administration may accept a loss.

"The president has made clear that he does not believe that is the proper role of government in the long term to be an owner of a private corporation," Mr. Bloom said. "And so we do not view ourselves as kind of market timer looking for the absolute best opportunity to sell."

The White House report said the money invested in GM and Chrysler ultimately saved the government tens of billions of dollars in direct and indirect costs, including the cost of unemployment insurance and lost tax receipts that the government would have incurred had the big Detroit auto makers collapsed. Since GM and Chrysler emerged from bankruptcy, the industry has created 115,000 jobs, its strongest period of growth since the late 1990s, the report said.

Mr. Obama's Toledo trip and the White House report are part of a broader Democratic effort to turn the industry bailout into a political advantage, particularly in Midwestern states that were hit hard by the recession and could provide key support for the president's re-election bid in 2012.

Treasury still holds 6% of Chrysler and is in discussions now to sell its remaining shares to Italian auto maker Fiat SpA, which now controls the Auburn Hills, Mich., auto maker. Fiat said last Friday that it hopes to exercise an option to buy the Treasury's remaining shares within 10 days.

The White House report also comes as the U.S. industry's sales have hit a lull. U.S. auto sales declined in May, in only the second significant slide since the fall of 2009, as short supplies, higher prices and economic worries weighed on demand, auto companies said Wednesday.

While most of the government's money flowed to GM and Chrysler as they underwent bankruptcy reorganizations, auto finance and parts suppliers also received aid.

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A Blended Portfolio:
Top 5 Stock Picks for Diversification This Summer...

As sure as the summer months are for vacations to rejuvenate the mind and soul, they are also for the savvy investor to rejuvenate his portfolio.

We have seen the markets slow down and turn sluggish this past May and forecast that the lazy months of June, July and August will take a break from the great gains of earlier this year. This is the time to make changes to our holdings and prepare our portfolios to reap the gains of the latter half of 2011.

In almost every sector you can find a winner - a great company, with a great business model on the verge of moving ahead of its competition by leaps and bounds. I have gathered a list of five companies that fit such criteria. All are a good fit for any diversified portfolio.

Priceline.com Inc. (PCLN) is on our list for a Services company that has seen extraordinary gains in the past year with more room to grow. Priceline offers various travel services, including airline tickets, hotel rooms, car rentals, vacation packages, reservation services and much more. This is "THE" mecca for the price-conscious traveler with and arm's length itinerary. The company's gross travel bookings were up 57.3 percent year/year, where international gross bookings grew by 79 percent year/year. Not too shabby for a slow moving economy. Looking forward, Priceline President and CEO Boyd said,

Globally, we intend to retain our focus on extending our reach in established and new geographic markets and providing an outstanding consumer experience to build the strength of our brands.


Polypore International Inc. (PPO) is our Industrial play that develops, manufactures and markets micro-porous membranes used in separation and filtration processes. The Energy Storage segment offers membranes that separate the cathode and anode in applications, including lithium batteries and lead-acid batteries. The Separations Media segment provides membranes that are used as high technology filtration element in various medical and industrial applications. Sales for the Energy Storage unit were up 35 percent year/year while sales for the Separation Media unit were up 12 percent year/year. Robert Toth, President and CEO, noted:

We are at the front end of long-term secular trends associated with mobile power and purity as it relates to high performance filtration. Our first quarter performance highlights the substantial growth potential associated with these trends and the strong demand affirms our confidence in the investments we've approved to date.

Polypore is the best when it comes down to their rank within the chemicals specialty group.


Altera Corporation (ALTR) is a leading supplier of programmable semiconductors and related products that mainly serves customers in the telecom and wireless, industrial automation, military, networking and computer storage sectors. With a market cap of 15.18B, this Tech company has a profit margin of 40.89 percent with a return on equity of 43.56 percent. Altera's first quarter results blew away 2010's with sales up 33 percent year/year. According to John Daane, President/CEO/Chairman of the Board, Altera's 40-nm based products are now entering the best part of their growth phase which ensures its investors of the company's continuing progress upwards. Altera also offers a nice bonus, a $.24 a share yearly dividend for its share owners.


Carbo Ceramics Inc. (CRR) is a fantastic player for the Oil and Gas industry. This company manufactures and supplies ceramic proppants primarily used in the fracturing process of natural gas and oil wells in the U.S. and internationally. With a market cap of 3.48B, they are more than your little start-up. Revenues last quarter were up 22 percent year/year, showing the commitment the U.S. has to providing jobs and sustainability in our own back yard. President and CEO Gary Kolstad commented:

CARBO is off to a good start in 2011, achieving the best quarter in the Company's history. Our technical marketing strategy continues to have a positive impact on increased well production and enhanced recovery. A clear result of this strategy is the continuing demand for ceramic proppant in both natural gas and liquids-rich resource plays, such as the Haynesville, Eagle Ford, Colony Wash, Permian, and the Bakken. Clients throughout the oil and gas industry turn to CARBO to meet their proppant demands, and we remain committed to growing our proppant franchise.

Carbo Ceramics also offers a yearly dividend of $.80 a share.


VMWare, Inc. (VMW) is a great Tech play within the computer software group. This is a much different business than our tech pick Altera. VMWare provides virtualization infrastructure software solutions and related support and services primarily in the U.S. This company has been on fire for quite some time now. Recently VMWare reported revenues for the first quarter were up 33 percent year/year.

"The quarter's strong performance underscores the value that VMware is providing customers on their journey to cloud computing," said Paul Maritz, CEO. "Customers continue to invest in our portfolio of virtualization and cloud infrastructure solutions to remove complexity and enable IT as a Service."

The company has not only focused on products and customer satisfaction but have been on a buying spree acquiring businesses to help them grow in a direction that will bring unbelievable benefits in all areas of their business.


Remember that the lazy months of summer are typically slow moving and we don't see much action in the markets during that period. Add, some great companies to your portfolio, stick to your long-term goals and sit back and wait for the rewards to come to you.