Wednesday, May 9, 2012

This Should Be Your First Investment

Young people are facing more financial challenges than ever. With soaring student loan balances, a tough job market, and general uncertainty about their future prospects, young adults have found it difficult to figure out how to dig their way out of the hole they find themselves in -- let alone start building a financial foundation for their future.

But if you only take one step toward starting to build up some savings for the long run and have at least some earnings from a job, your first step should be to set up a Roth IRA. It's hard to see down the road, but in time, if you can set aside even modest amounts toward your future now, they'll pay huge dividends in the decades to come.

Why Roths put time on your side
Financial planners recommend retirement accounts generally because of the tax savings they offer. Instead of having to pay taxes on all your income year in and year out, IRAs let you avoid all the hassle and expense of income taxes as long as your money stays in the account. That comes at the price of penalties in most cases if you have to take money out early, but that can provide a much-needed incentive to stick with an IRA even in tough times.

What Roth IRAs add to the mix, however, is the even bigger benefit of tax-free growth throughout your career. By contrast, traditional IRAs can give you a deduction for contributions now -- but if you don't make much money, then your tax rate is already quite low, making that deduction almost worthless compared to what it might save you during retirement.

How to get started
Many young people never bother opening brokerage or mutual fund accounts because they don't have very much money to invest. But it's getting increasingly easy to open accounts with even modest amounts to start out with.

For brokers, account minimums look like they're rapidly becoming a thing of the past. Scottrade, ING Direct, Fidelity, TD AMERITRADE, and E*TRADE Financial (Nasdaq: ETFC  ) are just a sampling of the brokers that don't require any minimum investment for IRAs, making it easy for savers who are just starting out to get an account opened. Even Schwab's (NYSE: SCHW  ) account minimum of $1,000 isn't out of reach for some to open an account.

On the mutual fund front, it's rare to find a true no-minimum account. But many mutual funds will let you make very small initial contributions of $50 to $100 if you commit to adding more money on a monthly or quarterly basis. By setting up automatic contributions, you can get access to mutual funds you otherwise would need a higher minimum investment to get into, and it can also help impose some discipline on your saving process.

What to invest in
As easy as it is to use traditional mutual funds to invest, I think your first Roth IRA investment should be an exchange-traded fund. ETFs can help you minimize your ongoing money-management costs, and many brokers offer commission-free ETF investing -- a crucial element for making ETFs work in small-balance accounts.

A broad U.S. stock-market ETF can start you off on the right foot with diversified exposure to some of the biggest companies in the world. Vanguard Total Stock Market ETF (NYSE: VTI  ) is available commission-free from both TD AMERITRADE and Vanguard and boasts annual expenses of just 0.06%. Most other brokers that offer ETFs have a similar fund in their lineup.

From there, it's easy to expand to other types of investments. Vanguard Total World Stock (NYSE: VT  ) expands your investing horizon to cover stocks around the world. If you want to add bond exposure to your portfolio, then Vanguard Total Bond Market (NYSE: BND  ) is just one of the viable choices you can use. With many brokers offering dozens of different commission-free ETFs to choose from, you should be able to put together a very precise portfolio that meets all your needs.

Start today!
Thinking about your future when you're struggling just to meet your present needs may seem like a luxury you can't afford. But when you think about it, you really can't afford not to start providing for your future. A Roth IRA makes that both simple and profitable by getting time working on your side for a change.

Eventually, a Roth IRA can go beyond ETFs to include individual stocks. To see what kind of stocks you should think about when you get to that point, let me suggest taking a look at the Motley Fool's special report on long-term investing. Inside, you'll find some great ideas on stocks that will serve you well over the years. Click here and get your free copy right now.

Get the scoop on the best discount brokers for your needsfrom the Fool's Broker Center.

Tune in every Monday and Wednesday for Dan's columns on retirement, investing, and personal finance. You can follow him on Twitter here.

Tuesday, May 8, 2012

SM Energy Beats on EPS, but GAAP Results Lag

SM Energy (NYSE: SM  ) reported earnings on Feb. 22. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), SM Energy beat expectations on revenues and beat expectations on earnings per share.

Compared with the prior-year quarter, revenue grew significantly and GAAP earnings per share contracted to a loss.

Margins contracted across the board.

Revenue details
SM Energy recorded revenue of $379.5 million. The 12 analysts polled by S&P Capital IQ looked for revenue of $346.5 million on the same basis. GAAP reported sales were 41% higher than the prior-year quarter's $268.3 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Non-GAAP EPS came in at $0.60. The 19 earnings estimates compiled by S&P Capital IQ forecast $0.56 per share on the same basis. GAAP EPS were -$1.89 for Q4 versus $0.57 per share for the prior-year quarter.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 72.1%, 140 basis points worse than the prior-year quarter. Operating margin was -47.7%, 5,970 basis points worse than the prior-year quarter. Net margin was -31.8%, 4,560 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $384.6 million. On the bottom line, the average EPS estimate is $0.64.

Next year's average estimate for revenue is $1.80 billion. The average EPS estimate is $3.64.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 293 members out of 310 rating the stock outperform, and 17 members rating it underperform. Among 80 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 76 give SM Energy a green thumbs-up, and four give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on SM Energy is outperform, with an average price target of $96.83.

Are you missing a major story in the energy space? Read about "One Stock to Own Before Nat Gas Act 2011 Becomes Law." Get instant access to this free report.

Add SM Energy to My Watchlist.

Diamond Foods Ousts CEO, CFO after Audit

Snack food company Diamond Foods (DMND) plunged 43% after hours after announcingthat the board has removed its CEO and CFO following an internal audit that revealed accounting problems.

Diamond had started the investigation after questions arose about payments the company made to walnut growers; critics charged that the company had shifted costs into future periods to boost results in advance of acquiring Pringles from Procter & Gamble (PG).

Chairman and CEO Michael Mendes and CFO Steven Neil are out. Rick Wolford, a director and the former CEO of Del Monte Foods, will take over as CEO and Michael Murphy of Alix Partners will come on as CFO.

The company will have to restate its financial statements.

“The Audit Committee has concluded that a “continuity” payment made to growers in August 2010 of approximately $20 million and a “momentum” payment made to growers in September 2011 of approximately $60 million were not accounted for in the correct periods, and the Audit Committee identified material weaknesses in the Company’s internal control over financial reporting,” the company said.

Monday, May 7, 2012

10 Things Campaign Managers Won't Tell You -

While it's been growing for decades, campaign spending is set to reach new heights this year. In 2000, President George W. Bush broke records, raising $100 million before the primaries. But that's a drop in the bucket compared with the hefty $1.8 billion spent between the Republicans and Democrats in preparation for the 2008 presidential election -- not to mention the $1 billion plus that former Federal Election Commission Chairman Michael Toner predicts will go into President Obama's reelection campaign alone.

Inside the April Issue Fix Your 401(k) 10 Things Campaign Managers Won't Tell You 9 to 5 -- at 75 Real Estate: When High Rents Are a 'Buy' Signal

Although in presidential campaigns there's a team of 20 to 40 people -- accountants, lawyers and others -- charged with handling financial issues (and there's often even a fund-raising chairman in each state), the responsibility of budgeting still falls largely on the campaign manager's shoulders, pros say. Essentially, says Candice Nelson, director of American University's Campaign Management Institute, they're running small businesses. And in politics, as in business, good managers control the money, says Steve Schmidt, who ran Arnold Schwarzenegger's 2006 reelection campaign for California governor and was a top aide on John McCain's 2008 presidential bid. "It's a fundamental line of demarcation" between those who are effective and those who aren't, he says. "Political maneuvering gets the attention, but it's all nonsense if you don't have the resources to apply it."

2. ...but we never took Accounting 101.

Few campaign managers have a business background, yet some admit that, given their dual CEO COO roles, they could use a crash course in accounting, at the very least: "It's something, in retrospect, I wish I had done," says David Kanevsky, who ran the 2010 campaign of Rep. Charlie Bass (R N.H.). The reason many don't? Besides the fact that it's often not among the required courses for poli-sci majors, there's little incentive to pursue financial training, much less a degree. After all, you move up the ranks based on what you learn on the job, who you know and how often you win, says Kanevsky. Well-known pundit James Carville, for one, worked as a litigator, high school teacher and military service member before running President Clinton's winning 1992 campaign. "It's a street-smart business," says Schmidt, McCain's aide.

3. The Do Not Call Registry can't touch us.

The nonpartisan Pew Research Center reports that 47 percent of registered voters received automated calls about the 2008 presidential campaign, and a whopping 69 percent received them during the 2010 midterms. Coming from most businesses, this kind of harassment is against the law -- but the law doesn't apply to candidates. When the National Do Not Call Registry was created in 2003, lawmakers exempted them, arguing a right to free speech. But critics like Shaun Dakin, founder of the nonprofit Citizens for Civil Discourse, say the law only benefits lawmakers. Now, every campaign "from dogcatcher to president" uses robocalls, he says. Voters can register with Dakin's National Political Do Not Contact Registry at Better yet, he suggests: Don't put a number on the voter-registration form.

4. We'd rather not discuss our pasts.

Unlike candidates, campaign managers are expected to stay out of the spotlight. But as a candidate gets closer to being elected, senior staffers may find it increasingly difficult (and crucial) to keep to the shadows. The campaign of former Republican presidential primary candidate Herman Cain, for instance, was well under way when it came to light that Mark Block, his chief of staff, had faced a lawsuit from the Wisconsin Elections Board (the suit was settled; Block denies any wrongdoing and tells SmartMoney that the accusations were politically motivated and that "politics is a blood sport.") And Dick Morris, the strategist on President Clinton's 1996 campaign, resigned when tabloid reports of infidelity with a prostitute surfaced. "The more the news talks about the campaign, the less they're talking about why a candidate should be elected," says Dan Kelly, who ran the 2010 campaign for Connecticut Gov. Dan Malloy, a Democrat.

5. We did well in the polls? We made the polls.

Things aren't as rosy as they appear. If you watch an ad or read that a candidate is doing well in the polls, there's a good chance that the favorable number came from the candidate's campaign (unless otherwise noted). Roughly 10 percent of a campaign's budget goes to research, which includes public polling and digging up dirt on the competitor ("opposition research"), and if the numbers come back in the candidates' favor, campaign managers will trumpet them, or find a way to spin negative numbers into something more positive. That's not to say that polling data isn't accurate, say experts, but voters should always take numbers with a grain of salt. Polling data is often used to persuade voters to not just vote for a candidate, but to also open up their wallets. "It's great for fund-raising," says American University's Nelson. "They'll say, we're up 10 points since last month -- now you should contribute!"

6. We like bonuses.

Of course, many managers talk about wanting their candidate to win for the sake of the public good, but there's a much less noble concern at play: cold hard cash. Win bonuses are often negotiated at the start of a campaign manager's stint, says Holly Robichaud, a political consultant in Massachusetts who's managed local, state and federal campaigns. Losers may be out of luck, but the prize for winning can be an additional one or two months' salary (salaries can run $2,000 to $15,000 a month, or around $100,000 a year, depending on the candidate and the size of the race), say experts. Plus, some candidates will pick up the tab on health insurance and cell phone bills. It's a way to incentivize people, say experts, to put in the grueling hours the job demands. But in the end, says McCain's aide Schmidt, it's more about the game than anything else: "It's so competitive and there's so much pressure -- winning for the sake of winning becomes the superior instinct."

7. The money you send doesn't reach us.

Before you write that check to a candidate, know that there's a chance your donation could end up in someone else's pocket. While TV, print and Web ads, along with administrative costs, eat up the majority of the budget, a percentage goes to the candidate's party or to other candidates. In the 2008 presidential election, the Obama campaign doled out nearly $46 million, or 6 percent of its total spending, to those groups, according to the nonpartisan Center for Responsive Politics. People who wish to contribute, experts say, should note the difference between donating to a campaign and giving money to a leadership political action committee, or PAC: Most of the former's budget is spent on the campaign; the latter funnels money to other campaigns and politicians.

8. We'll work for (almost) anyone.

While managers rarely jump from party to party, it's not uncommon to see some intraparty switching of support. Barely a month after Jon Huntsman formally began his bid for the Republican presidential nomination, for instance, his campaign manager, Susie Wiles, resigned and several months later endorsed team Mitt Romney (she decided he would "be best at running against Barack Obama," she says). Often, there are some litmus tests that managers use in picking a candidate, say experts, especially around hot-button issues like abortion or gun rights. But ultimately, it comes down to who has the best chance of winning: "It was [conservative activist] William Buckley who said to go with the most electable conservative in a Republican presidential primary," says Kanevsky, Bass's former manager.

9. This job is a stepping-stone -- to stardom.

Turn on the TV and you'll likely see a onetime manager sharing his or her insights. With cushy salaries and reasonable workweeks, professional punditry is nice work if you can get it. Bob Beckel, cohost of "The Five" on Fox News, who ran Walter Mondale's presidential campaign in 1984, says he doesn't know of anyone getting out of politics who isn't hoping to get into TV (Fox News, like SmartMoney, is owned by News Corp.). Of course, the dearth of TV jobs means many former campaign managers end up working as highly paid political consultants or lobbyists instead, or they leave politics altogether, say insiders. "Campaigns are a young man's game," says Beckel. "If you stay, you'll die prematurely."

10. Sometimes we play dirty...very dirty.

The win-at-all-costs mentality of campaigns can wreak havoc with ethics. Recently, Paul Schurick, who in 2010 ran the campaign for former Maryland Gov. Robert Ehrlich Jr., a Republican, was convicted on four counts related to campaign robocalls, which prosecutors said were intended to discourage black voters from hitting the polls. (Schurick's lawyer declined to make his client available for comment prior to sentencing, though he said they plan to appeal the ruling.) More common are tactics that may be legal but not honest. One trick, says Kelly, the 2010 manager for Connecticut governor Malloy, is to make a negative ad saying that an incumbent mayor did something controversial, like hiring a felon. Even if the governor didn't vet the hire, he would have had to sign off on it. "There's enough truth to the ad that it won't be pulled, but it's a stretch," say Kelly.

Additional reporting by Kate Poole,

Sunday, May 6, 2012

Stock Investment Software

Whаt is the benefit of using stock investment software?  

Yου can view charts of virtually any traded stock using free software readily available on the Internet. Thіѕ is a ехсеƖƖеnt starting point in getting a feel for what charts are and whаt thеу ѕhοw уου.   Bυt, you will no doubt soon find that you want to have more control over how the data is ѕhοwеԁ and also what information уου can view and print off for further consideration.  

Whаt would I use it for exactly – just charting or more?  

Charting is the obvious use for stock investment software but οf a comprehensive investment аррrοасh it is really only a раrt.  

Tο make efficient use of your time (аnԁ significantly сυt thе hours you need to work) you really want a much more comprehensive wrap. One that includes:  

A really fаntаѕtіс stock market screener (Vital to use уουr time wisely and seek out those leaders)   A way of viewing and sorting industry groups and sectors   A tool to compare (preferably on percentage terms) fundamental statistics of a stock with others in іt’s assemble   Associations enabling you to access any current news about уουr select stock   Thе skill to maintain and organize a watch list   A source of information relating to institutional investors and their action (οr lack of іt) in the stock that уου′re considering.  

Sοmе of this overlaps and is supplemented by ensuring you read thе best investment newspaper but choosing the right software саn mаkе the ԁіffеrеnсе linking really finding the best leaders before or after thеу′ve ѕtаrtеԁ to ɡο.  

Whеn considering a stock for bυу уου′ll be looking at a pool of fundamental data in conjunction with іt’s chart action.   Yου don’t want to be trawling individual corporations web sites searching for the data on which you make your decisions. Thе value of an brilliant stock investment software wrap is іn putting all this information readily at your fingertips.   It can be extremely helpful if you have a program that will set thіѕ information out alongside the chart so as you can make qυісk аnԁ regular thwart reference to it  

Yου mау well also рƖοt some of this additional data over thе chart yourself. Fοr example, lets ѕау уου′re looking at a company wіth 5 years worth of accelerating earnings and sales which іѕ noted next to a sound looking chart. Yου mау really сhοοѕе tο рƖοt those quarterly figures over the chart to see how the 2 correlate. Dοеѕ the stock price ɡο lead or lag the figures?

Hοw do I judge which is the best?  

Thе best way is to try a few and see what you get on with BUT υѕе the free ones іn anticipation οf you get a feel for what you want thаt thеу don’t рƖасе forward. Aѕ you get more experienced (I’m talking weeks nοt years!) уου′ll find little frustrations relating to what you саn аnԁ саn’t ԁο. Now is the time to take a free trial period on a paid wrap to see what it can do for уου.