Saturday, May 24, 2014

Why You Should Never Wash Your Jeans

#fivemin-widget-blogsmith-image-50163{display:none}.cke_show_borders #fivemin-widget-blogsmith-image-50163,#postcontentcontainer #fivemin-widget-blogsmith-image-50163{width:570px;height:411px;display:block} Why You Shouldn't Wash Your Jeans

Levi's CEO Chip Bergh says you should keep your jeans out of the washing machine. Bergh lives by his words and hasn't washed his own jeans in more than a year, reports Neha Prakash at Mashable. The executive claims that eschewing the washing machine keeps your jeans in mint condition and is better for the environment. Bergh was speaking at Fortune's Brainstorm Green conference, where business leaders discuss ways to be more sustainable. Bergh also discussed how Levi's created a line of jeans that take less water to produce. Here's a video of his comments from Fortune. In the past, Levi's has suggested freezing your jeans instead of putting them in a washing machine. The company told Elle Magazine that doing this once a month would keep jeans from smelling bad. Not washing jeans has become somewhat of a craze. TV host Anderson Cooper famously said he wears the same pair daily and only washes them once a year.

Gas prices have familiar look as summer nears

NEW YORK (AP) — The price of gasoline looks familiar this Memorial Day. For the third year in a row, the national average will be within a penny or two of $3.64 per gallon.

Stability wasn't always the norm. Between 2003 and 2008 average retail gasoline prices more than doubled, reaching an all-time high of $4.11 per gallon in 2008. Prices then collapsed as the U.S. plunged into recession. But after a two-year run-up between 2009 and 2011, the price of gasoline has remained in a range of roughly $3.25 to $3.75 per gallon.

Drivers can handle that, according to AAA, and are ready to head out for Memorial Day driving trips in the highest numbers since 2005. "It is unlikely that gas prices will have a significant effect on travel plans compared to a year ago," AAA wrote in its annual Memorial Day forecast.

Steady gasoline prices are largely the result of relatively steady crude oil prices, even though there has been a long list of global supply disruptions and political turmoil that that typically would push the price of oil higher.

Sanctions have sharply cut output from Iran, once the world's third largest oil exporter. Libya went through civil war, and labor and political disruptions continue to limit its exports. Venezuela's oil output has been steadily declining for a decade. Most recently, the conflict between Russia and Ukraine is raising concerns that sanctions will impact production or exports from Russia, the world's second largest exporter after Saudi Arabia.

But rising crude output in countries such as the U.S., Canada and Brazil have offset the declining supply elsewhere, helping to keep prices steady.

Approaching this Memorial Day, the national average is $3.65 per gallon, according to AAA, OPIS and Wright Express. Last year on the holiday it was $3.63 per gallon. In 2012 it was $3.64.

The story is similar with other fuels. Through the first quarter of this year airlines are paying $3.03 per gallon for jet fuel — exactly the same they paid on average ! for all of last year, according to the Bureau of Transportation Statistics. The average price of diesel, $3.93 per gallon, is a nickel higher than last year.

Averages only tell part of the story, though. Tom Kloza, chief oil analyst at the Oil Price Information Service and, compares the national average price of gasoline to the average temperature of the country — outside your door it's almost certainly hotter or cooler than the average.

This year, drivers in the Midwest, Great Plains states and the Rockies are paying quite a bit less than they did a year ago on Memorial Day weekend. The Minnesota average of $3.49 is 78 cents lower than last year, the biggest drop in the nation. Drivers in North Dakota, Nebraska, Oklahoma, Iowa and Kansas are all paying at least 50 cents per gallon less.

That's because last year some big Midwest refineries were taken offline to be upgraded to handle cheaper Canadian crude oil. That work is done and the refineries are churning out a lot of fuel, pushing down prices in the region.

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The story is different on the coasts, though. Refineries there have to pay higher prices for global crude, and more refineries are seeing downtime in Texas and Louisiana than in recent springs, according to Kloza. Gulf coast refiners supply much of the nation, and especially the coasts, with fuel.

Pennsylvania drivers are paying $3.77 per gallon on average. That's 27 cents higher than last year, the biggest increase in the country. Drivers in the Carolinas and Alabama are paying at least 20 cents more than last year, though they are paying less than the national average.

As usual, California drivers are paying the most in the lower 48 states, at $4.15 per gallon, about 10 cents higher than last Memorial Day weekend.

Across the nation, all U.S. drivers will likely be paying less in the coming weeks, the result! of a typ! ical seasonal decline between late spring and early summer.

"Temperate-to-lower prices is the most likely path for the next couple of months," Kloza says. "And then in hurricane season you just cross your fingers."

Jonathan Fahey can be reached on Twitter @JonathanFahey

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Friday, May 23, 2014

CFP Board to Investigate CFPs for Inaccurate Comp Disclosure

The Certified Financial Planner Board of Standards sent a letter Wednesday to all 70,000 CFP certificants explaining a new investigative process the Board will take to identify certificants who inaccurately disclose their compensation methods on the Board website’s “Find a CFP” tool.

Board Chairman Ray Ferrara, CFP, said in an interview Wednesday that the investigation will begin with those who call themselves fee-only advisors “because that’s where there’s the biggest opportunity for confusion and potential abuse.”

The investigation will be conducted, said Ferrara, “on a risk-adjusted basis, randomly” selecting certificants who have ticked the “fee only” box on its website, then consulting information “in the public domain to make sure the compensation they’ve disclosed is what’s consistent with their actual business practices.” That information, said Ferrara, will start with an “informal check-in” with the certificant but will also include “social media, a website, a form ADV, anything else that we could Google” about the certificant.

CEO Kevin Keller said in the same interview that “our real objective is to help facilitate compliance. It’s not to play 'Gotcha!' or catch people doing things wrong but to help them comply with our standards.”

In the letter, the interview and in an op-ed in Investment News, Ferrara admitted that the Board “could have done a better job” in “rolling out our Find a CFP tool, especially when we added compensation as a choice.” He also said that “when we recognized there might be multiple people who did not have the proper box checked” concerning compensation on the site, “we made a decision and took down all 8,000 and sent out a notice, said these are our rules, double check and put yourselves back up in the proper box.” In addition, “at that time we said there would be additional steps taking place, and if we find anyone has still misrepresented their compensation we might open up an investigation.”

The issue with the CFP Board’s compensation came to light first with the departure of former CFP Board Chairman Alan Goldfarb and three other Board members following a sanction over their failure to comply with the Board’s fee-only definition, and most notably via a lawsuit filed by certificants Jeff and Kim Camarda of Camarda Wealth Advisory in Fleming Island, Florida, who also fell short of the Board’s fee-only strictures.

That lawsuit continues, and Ferrara said Tuesday that “with regards to the case … the Board has consistently said that we want to defend this lawsuit vigorously because it goes to the heart of who we are and what we stand for.” Specifically, he said the Board “provided the Camardas with a full and fair process, which was the same process that anyone who has allegations made against them” will receive. The Board’s disciplinary and ethics commission, and the appeals committee “made up of the board of directors agreed” in the Camardas' case “that the rules were broken and we won’t back down from the court case.” /* .premium-promo { border: 1px solid #ddd; padding: 10px; margin: 0 10px 10px 0; width: 200px; float: left; } .premium-promo li, .premium-promo ul { list-style-type: none; margin: 0; padding: 0; } .premium-promo li { margin: 0 0 10px; padding: 0 0 10px; border-bottom: 1px dotted #ddd; } .premium-promo h3 { text-transform: uppercase; font-size: 11px; } .premium-promo h4 { font-size: 16px; } .premium-promo a { text-decoration: none !important; } .premium-promo .btn { background: #0069a1; border-radius: 4px; display: inline-block; padding: 5px 10px; clear: both; color: #fff; font-weight: bold; } .premium-promo .btn:hover { background: #034c92; } */ In fact, those certificants who are investigated under the Board’s new process and whose compensation is identified as being inconsistent will go through the same process as the Camardas, Ferrara said. If the Board’s investigation finds out that a ‘fee-only’ CFP is, for instance, “licensed with five insurance companies, that will obviously cause us to do a referral to our professional standards department which will begin the normal investigative process and follow the full and fair process that the Camardas and others who have been in the news recently went through.”

In addition to its investigation of CFPs who call themselves fee only, the Board also announced in its letter that it is offering “any company, no matter how large or small, to contact us through their compliance officers” to report any CFPs at their firms who have listed themselves as fee only and are not. “They’ll be taken down, to keep inadvertent errors from occurring.”

Ferrara stressed that “CFP Board is compensation- and business-model neutral,” that “competent and ethical financial planning can be done regardless of business model,” and moreover “that it can be done with the fiduciary standard of care when practicing financial planning. Every professional at all times must put the needs of the clients ahead of his or her own.” 


Check out How to Break Impasse Over CFP Board’s Comp Disclosure Rules by Michael Kitces on ThinkAdvisor.

Thursday, May 22, 2014

Robots will replace fast-food workers

fast food robots

Protesters rally outside McDonald's corporate headquarters in Oak Brook, Ill., on Wednesday to demand higher wages for workers.

NEW YORK (CNNMoney) As protesters across the country call for the fast-food chains to raise their wages, a number of companies have begun experimenting with new technology that could significantly reduce the number of restaurant workers in the years to come.

Restaurant industry backers warn that a sharp rise in wages would be counterproductive, increasing the appeal of automation and putting more workers at risk of job loss.

"Faced with a $15 wage mandate, restaurants have to reduce the cost of service," blared an ad in The Wall Street Journal last year from the Employment Policies Institute, which supports corporate interests. "That means fewer entry-level jobs and more automated alternatives -- even in the kitchen."

Other industry observers aren't so definitive, noting that it takes time to introduce new technology and that human interaction has always been a major component of the hospitality business. What's clear at least is that software and machines will play an increased role in our dining experiences going forward.

It slices, it dices, it's a noodle robot!   It slices, it dices, it's a noodle robot!

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Panera Bread (PNRA) is the latest chain to introduce automated service, announcing last month that it plans to bring self-service ordering kiosks as well as a mobile ordering option to all its locations within the next three years. The news follows moves from Chili's and Applebee's to place tablets on their tables, allowing diners to order and pay without interacting with human wait staff at all.

Panera, which spent $42 million developing its new system, claims it isn't planning any job cuts as a result of the technology, but some analysts see this kind of shift as unavoidable for the industry.

In a widely cited paper released last year, University of Oxford researchers estimated that there is a 92% chance that fast-food preparation and serving will be automated in the coming decades.

With artificial-intelligence technology like IBM's (IBM, Fortune 500) Watson platform making strides in advanced reasoning and language understanding, it's not hard t! o see how robots could be designed to provide more sophisticated interactions with restaurant customers than kiosks can manage.

Delivery drivers could be replaced en masse by self-driving cars, which are likely to hit the market within a decade or two, or even drones. In food preparation, there are start-ups offering robots for bartending and gourmet hamburger preparation. A food processing company in Spain now uses robots to inspect heads of lettuce on a conveyor belt, throwing out those that don't meet company standards, the Oxford researchers report.

Darren Tristano, a food industry expert with the research firm Technomic, said digital technology will "slowly, over time, create efficiency and labor savings" for restaurants. He guessed that work forces would only drop as a result by 5% or 10% at a maximum in the decades to come, however, given the expectations that customers have for the dining experience.

"If you look at the thousands of years that consumers have been served alcohol and food by people, it's hard to imagine that things will change that quickly," he said. To top of page

Wednesday, May 21, 2014

JPMorgan Chase to invest $100M in Detroit

DETROIT -- Detroit's revitalization hopes are getting a boost from one of the deepest-pocketed players in U.S. finance.

JPMorgan Chase, the nation's biggest bank, will announce Wednesday that it is investing $100 million in Detroit over five years, strengthening the city's redevelopment efforts, speeding up blight removal, helping train city residents for new jobs, and making mortgage money available for home loans.

About half the cash will come in the form of loans and the rest in grants. Chase has been working for several months developing the program, which will be announced Wednesday at a luncheon featuring Gov. Rick Snyder, Mayor Mike Duggan and JPMorgan Chase Chairman and CEO Jamie Dimon.

Dimon told the Detroit Free Press that the idea started last fall when Detroit was going through its painful bankruptcy.

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"Obviously Detroit was having issues," Dimon said. "I got together some of our senior people and said what can we do that's really neat, that could be really creative."

Chase is already a leading Detroit lender to consumers as well as to businesses.

Snyder hailed the commitment, calling it "very exciting."

"I think it really helps and it sends a great message that people see significant value in investing in Detroit and that there's a lot of upsides," he said.

Snyder added that Chase's commitment might help nudge state lawmakers to vote on the rescue plan for Detroit. That plan would see the state commit the equivalent of $350 million over 20 years toward a "grand bargain" to shore up Detroit pensions and protect artwork at the Detroit Institute for Arts from sale. It is currently being debated in the Legislature.

The successor company to the old National Bank of Detroit, which was founded in Detroit in the depths of the Great Depression, JPMorgan Chase has more than 1 million consumer customers in the region ! and more than 2,500 employees in southeast Michigan.

Dave Blaszkiewicz, president of the civic group Downtown Detroit Partnership and head of the Invest Detroit fund for local development projects, said the Chase investments will be key in advancing Detroit's revitalization efforts.

"You couldn't ask for a better time to bring these dollars in," he said.

Tuesday, May 20, 2014

Finra holds off sending nontraded REIT share price rule to SEC

Finra is delaying sending proposed new rules to the Securities and Exchange Commission that would give investors a clearer picture of what it costs to buy shares of a nontraded real estate investment trust.

The Financial Industry Regulatory Authority Inc. in February proposed the rule changes, which, if approved by the SEC, would do away with the practice of broker-dealers listing the per-share value of a nontraded REIT at $10, the common price at which registered reps sell them to clients.

Finra's potential rule change would take into consideration the various fees and commissions paid to brokers and dealer managers, reducing the share price for each nontraded REIT on a customer's account statement. The potential rule change, which Finra initially made in September 2011, also applies to unlisted private placements.

The comment period on the proposed rule changes ended in mid-March. Last Friday, Finra's assistant general counsel Matthew Vitek told the SEC in a letter that Finra was “still considering comments” to the rule filing but “anticipates submitting a response to comments and amendments to the above reference rule filing in the near future.”

Finra spokeswoman Michelle Ong had no comment.

John McInerney, a spokesman for a nontraded REIT trade group, the Investment Program Association, said that the organization “doesn't have any insight to share about the regulatory process at this time.”

The IPA in March submitted a comment letter to the SEC that would put off till the end of 2015 making changes to how REIT valuations appear on client account statements. The IPA in its letter asked for more time to give nontraded REIT sponsors and broker-dealers that sell the products to adjust.

Finra's proposed rule changes come as sales of nontraded REITs have increased dramatically, reaching close to $20 billion in 2013, double the amount sold in 2012.

Finra's proposal affects independent broker-dealers and their affiliated reps because those firms and reps almost exclusively sell nontraded REITs.

The specific rule that Finra is proposing to change is NASD Rule 2340, regarding customer account statements.

Stocks: Are You Nervous Yet?

On Wednesday, the respected hedge-fund manager David Tepper, who runs $20 billion at Appaloosa Management, told an investing conference that "the market is kind of dangerous right now.…I'm nervous. I think it's nervous time right now."

That's for sure. The Dow Jones Industrial Average dropped 167 points on Thursday, or 1%, as investors flipped from complacency to anxiety in a heartbeat.

Earlier in the week, stock indexes around the world had marched to new all-time highs: the Dow, the S&P 500, the German DAX, the Argentine and Indian markets, the MSCI World index of 23 developed countries.

Mr. Tepper perfectly captured the worry that lies at the heart of this latest rally in stocks.

If you share his concerns, there's no need to make drastic changes to your stock portfolio, but shifting your focus to markets outside the U.S. in search of better returns is a wise move.

The question on most investors' minds is: Are stocks cheap or expensive? The S&P 500 is trading at an average of 15.3 times what analysts expect the companies to earn over the next year—barely above the typical long-term level of 14.7 times expected earnings, according to Gina Moore and Chris Covington of AJO, a Philadelphia-based investment firm that manages $24 billion.

"But are those earnings expectations too high or too low?" asks Matthew Kamm, who co-manages $22 billion in growth stocks at Artisan Partners in Milwaukee. "There's a fistfight in the market right now trying to figure that out."

In the first quarter, earnings at S&P 500 companies grew 2.1%, compared with the 1.3% decline that analysts expected in March, according to FactSet.

If the U.S. and global economies continue to recover, corporate profits should grow robustly. But if the recovery falters, then high expectations will turn out to have been only hopes—and stocks aren't priced to permit much margin for error if those hopes are shattered.

That is especially true in the U.S.

Most stock markets elsewhere in the developed world are much cheaper than they were at the last market peak in 2007, says Doug Ramsey, chief investment officer at Leuthold Weeden Capital Management in Minneapolis.

In October 2007, the MSCI World ex USA index, which includes 22 developed markets outside the U.S., traded at 27.2 times its average earnings over the previous five years; now it is at 19.2 times the past five years' earnings, according to Mr. Ramsey. The U.S., meanwhile, is back to where it started—coming down to 23.3 times earnings now from its 2007 level of 24.4 times.

The U.S. market is trading at 61% more than its average ratio of price to long-term earnings, adjusted for inflation, according to Amie Ko, an analyst at Research Affiliates, a firm in Newport Beach, Calif., that advises on $169 billion in investment strategies world-wide.

Meanwhile, her data show, 12 major developed and emerging markets, including Brazil, Italy, China and South Korea, are trading for at least 20% less than their historical average on the same measure.

It is important to realize, however, that such numbers are data, not destiny. Common sense and financial history say that stocks will have the highest returns when you buy them at the lowest valuations. But stocks can stay expensive for an amazingly long time, and all your teeth and hair could fall out before stocks finally become an unambiguous bargain again.

Finance professors Elroy Dimson, Paul Marsh and Mike Staunton of London Business School have found that U.S. stocks have done the best—delivering annual returns of 10% and up, after inflation—when investors buy them at less than 14 times their long-term dividends, adjusted for the cost of living.

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Unfortunately, the last time stocks were so cheap by that measure was December 1942.

U.S. stocks tend to have done the worst when they trade above 35 times that measure of dividends. And they have been valued at least that richly 92% of the time since the beginning of 1987, according to data from Yale University economist Robert Shiller.

From those levels, according to the London Business School researchers, U.S. stocks have historically delivered average annual returns of 3% to 4%, after inflation, over the ensuing five to 10 years.

So you should certainly expect underwhelming performance over the years to come. On the other hand, you shouldn't dump U.S. stocks en masse; the future just isn't that certain.

If you want to earn higher returns, you will have to venture abroad. Exchange-traded funds like SPDR MSCI ACWI ex-US (annual expenses: 0.34%, or $34 per $10,000 invested), iShares Core MSCI Total International Stock (annual expenses, 0.16%), Vanguard FTSE All-World ex-US (0.15%) and Schwab International Equity (0.08%) all offer exposure to hundreds of overseas stocks at extremely low cost.

"Foreign stocks are so much cheaper, you'll probably get some degree of outperformance [from them] even if economies outside the U.S. don't do as well," says Mr. Ramsey of Leuthold Weeden. "You really don't need to be right on the fundamentals when the valuation gap is this wide."

— Write to Jason Zweig at, and follow him on Twitter:@jasonzweigwsj

Monday, May 19, 2014

To succeed at investing, focus on not failing

When asked how to succeed in life, Charlie Munger once replied: "Don't do cocaine. Don't race trains. And avoid all AIDS situations." His point: Success isn't just about what you do. It's also about what you don't do, and you can be successful in life just by avoiding major, obvious mistakes.

The same logic applies to investing. In his famous 1975 essay "The Loser's Game" -- later expanded into a best-selling book -- Charlie Ellis compares investing to amateur tennis. Using statistical work and theories developed by scientist Simon Ramo, Ellis points out that amateur tennis players rarely win matches with brilliant shots. In fact, 80% of the time, the winner of an amateur match is the player who makes fewer mistakes. So if you're a beginner who wants to improve, you should start by mastering the basics.

Here are six of the biggest mistakes an investor can make -- a half-dozen financial shots into the net. If you can avoid them, the odds are stacked in your favor.

1. Failing to save

It's obvious, but if you don't save, you can't invest. Unfortunately, nearly a third of Americans don't save anything, according to a survey by the nonprofit Consumer Federation of America. And those who do save don't save that much. The personal savings rate was about 4% to 5% during the past year, according to Federal Reserve data. Admittedly, saving can be hard, but it's important -- you can't win the game if you're not even playing. If this guy can do it, then it should be possible for most people.

2. Not investing in stocks

Over time, stocks have been a gold mine for investors. Fools understand this, but most Americans don't. According to a survey conducted by Gallup, only 24% of Americans think that stocks or mutual funds are the best long-term investment. What do the other 76% think is the best investment? Real estate tops the list at 30%, followed by gold at 24%.

There's no doubt that real estate or real estate investment trusts can earn a good return, but that comes from renta! l income, not appreciation. According to data going back to 1890 from Yale economist Robert Shiller, the real appreciation of home prices after inflation is 0.2% annually. Too many Americans consider their home to be their biggest "investment." That's a big mistake. Buying a house (or a bigger house), which generates no rental income, won't net much after inflation, at least on average, according to historical data.

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Gold isn't much better in terms of returns. According to Greg Mankiw, a Harvard economist, the after-inflation return on gold going back to 1836 has only been about 1%. During the same period, stocks earned more than 7% after inflation.

3. Paying high fees

Over long periods of time, high fees have an incredibly deleterious effect on your investment returns and your wealth.

Let's say you had $100,000 to invest. So you found an investment advisor who charged 1% of fees to manage your account, and that advisor invested your portfolio in active funds that charged another 1%. So the total fee is 2% of assets -- that's not uncommon. And let's say your account earned 10% annually for 25 years. Your account would be worth $560,409 in the end.

Conversely, if you hadn't hired the advisor and instead decided to manage your account on your own -- building a diversified portfolio of stocks and using low-cost mutual funds -- you probably could've generated the same 10% returns per year. But your costs would've been much lower -- say, 0.3% annually. In that case, after 25 years, you'd have $905,295 in your account.

4. Frequent trading

Trading is hazardous to your wealth. In 2000, Brad Barber and Terrance Odean published a paper by that name investigating the activity and results for 78,000 accounts during a six-year period. During the years the study covered (1991-1996), the market averaged annual gains of 17.9%. Those who trad! ed the mo! st had net average returns of just 11.4%, while those who traded the least achieved net average returns of 18.5% per year.

Why do traders fare so badly? They are overconfident, and their buy and sell decisions are often wrong. And they're wrong at a high cost because they expose themselves to extra frictional costs -- commissions, bid/ask spreads, and taxes.

5. Not diversifying

Economists have described diversification as the only "free lunch" in the markets based on the capital asset pricing model work done by Harry Markowitz. But it's really just common sense: Don't put all your eggs in one basket. The same advice has been suggested by Shakespeare, the Bible, and the Talmud.

There's a good chance that you'll be wrong on a particular investment. Even great stock-pickers like Peter Lynch only aim to be right about 60% of the time. So it makes sense to spread your assets beyond just a few stocks. That's why Motley Fool premium services, such as Stock Advisor, recommend that members own at least 15 stocks.

6. Trying to get rich quick

In investing, the tortoise usually outperforms the hare. Unfortunately, wanting to get rich quick is human nature, and it leads to huge mistakes like buying penny stocks, chasing fads, and taking "hot" tips. If something sounds too good to be true, it probably is.

Since 2009, the Motley Fool has tracked more than 200 "get rich quick" stocks -- mostly penny stocks associated with a hot fad and hyped by promoters -- through a CAPS account called TMFStockSpam. As a group, these stocks have proven woeful. More than 93% have underperformed the market, and the robotic strategy of betting against these stocks resulted in TMFStockSpam outperforming more than 99.99% of the nearly 75,000 players on CAPS.

The Foolish bottom line

If you avoid these six mistakes, you'll be saving regularly, investing in stocks, keeping fees down, holding investments for the long term, diversifying your portfolio, and avoiding scams. This won't guarante! e overnig! ht success, but it will heavily tilt the odds of long-term success in your favor. In fact, it would be hard to fail.

The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.

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Sunday, May 18, 2014

Dehumidifiers recalled after overheating, fires

Appliance manufacturer Gree has issued another recall for a line of its dehumidifiers after consumers failed to heed the initial recall last year, leading to fires and property damage.

The Gree dehumidifiers, sold under numerous brand names, can overheat, smoke and catch fire, placing consumers at risk.

About 2.5 million units have been sold in the United States and 55,000 in Canada. This recall was first announced in September 2013, updated in October and expanded in January.

Since the original recall the number of reported incidents of overheating has increased to 471, and the number of reported fires to 121.

When first recalled, these dehumidifiers had caused approximately $2.15 million in property damages, but that has since doubled to $4.5 million.

The recall involves dehumidifiers with capacity ranging from 20 to 70 pints, sold under the brand names: Danby, De'Longhi, Fedders, Fellini, Frigidaire, GE, Gree, Kenmore, Norpole, Premiere, Seabreeze, SoleusAir and SuperClima.

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The products were removed from all retail outlets in 2013. They were sold at the following retailers: AAFES, HH Gregg, Home Depot, Kmart, Lowe's, Menards, Mills Fleet Farm, Sam's Club, Sears and Walmart, as well as online at and

The dehumidifiers are white, beige, black or gray and are between 19-24 inches tall, 13-15 inches wide, and 9-11 inches deep. The brand name and the pint capacity are printed on the front of the dehumidifier. The model number and date code are printed on a sticker on the back, front or side of the unit.

Recall brands, model numbers, and date codes are listed on the Consumer Product Safety Commission's website at

Consumers should immediately turn off and unplug the dehumidifiers and contact Gree toll free for a full refund at 86! 6-853-2802 from 8 a.m. to 6 p.m. ET Monday through Friday or online at and click on Recall for more information.

Why You Don't Want to Own IBM

IBM IBM just finished a tough week.  IBM fell 2% after an investor briefing on Wednesday, dragging the Dow Jones Industrial Average (DJIA or Dow) down over 100 points.  And as the Dow reversed course to end up 2% on the week, IBM continued to drag, ending down almost 3% for the week.

Of course, one bad week – even one bad earnings announcement – is no reason to dump a good company's stock.  The vicissitudes of short-term stock trading should not greatly influence long-term investors.  But in IBM's case, we now have 8 straight quarters of weaker revenues.  And that HAS to be disconcerting.  Managing earnings upward, such as the previous quarter, looks increasingly to be a short-term action, intended to overcome long-term revenue declines which portend much worse problems.

IBM leadership appears to have lost its way

This revenue weakness roughly coincides with the tenure of CEO Virginia Rometty.  And in interviews she increasingly is defending her leadership, and promising that a revenue turnaround will soon be happening.  That it hasn't, despite a raft of substantial acquisitions, indicates that the revenue growth problems are a lot deeper than she indicates.

CEO Rometty uses high-brow language to describe the growth problem, calling herself a company steward who is thinking long-term.  But as the famous economist John Maynard Keynes pointed out in 1923, "in the long run we are all dead."

Today CEO Rometty takes great pride in the company's legacy, pointing out that "Planes don't fly, trains don't run, banks don't operate without much of what IBM does."  But, powerful as that legacy has been, in markets that move as fast as digital technology any company can be displaced very fast.

Just ask former CEO Scott McNealy and his leadership team at Sun Microsystems.  Sun once owned the telecom and enterprise markets for servers – before almost disappearing and being swallowed by Oracle Oracle in just 5 years (after losing $200B in market value.)  Or ask former CEO Steve Ballmer at Microsoft, who's delays at entering mobile have left the company struggling for relevancy as PC sales flounder and Windows 8 fails to recharge historical markets.

Managing earnings is not managing for long-term success

CEO Rometty may take pride in her positive earnings management.  But we all know that came from large divestitures of the China business, and selling the PC and server business to Lenovo.  As well as significant employee layoffs.  All of which had short-term earnings benefits at the expense of long-term revenue growth.  Literally $6B of revenues have been sold off just during her leadership.

Which in and of itself might be OK – if there was something to replace those lost sales.  Even if they didn't have any profits – because at least we have faith in Amazon creating future profits as revenues zoom. But IBM was far late to the cloud, and hasn't shown it has anything to leapfrog industry leaders.

The REAL problems – R&D cuts, higher debt, massive stock buybacks

What should terrify investors about IBM are two things that are public, but not discussed much behind the hoopla of earnings, acquisitions, divestitures and all the talk, talk, talk regarding a new future.

CNBC reported that 121 companies in the S&P 500 (27.5%) cut R&D in the first quarter.  And guess who was on the list?  IBM, once an inveterate leader in R&D, has been reducing R&D spending.  The short-term impact?  Better quarterly earnings.  Long term impact????

The Washington Post reported more this week about the huge sums of money pouring out of corporations into stock buybacks rather than investing in R&D, new products, new capacity, enhanced marketing, sales growth, etc.  $500B in buybacks this year, 34% more than last year's blistering buyback pace, flowed out of growth projects. To make matters worse, this isn't just internal cash flow spent on buybacks, but companies are actually borrowing money, increasing their debt levels, in order to buy their own stock!

And the Post labels as the "poster child" for this leveraged stock-propping behavior…. IBM.  IBM

"in the first quarter bought back more than $8 billion of its own stock, almost all of it paid for by borrowing. By reducing the number of outstanding shares, IBM has been able to maintain its earnings per share and prop up its stock price even as sales and operating profits fall.

The result: What was once the bluest of blue-chip companies now has a debt-to-equity ratio that is the highest in its history. As Zero Hedge put it, IBM has embarked on a strategy to "postpone the day of income statement reckoning by unleashing record amounts of debt on what was once upon a time a pristine balance sheet."

In the case of IBM, looking beyond the short-term trees at the long-term forest should give investors little faith in the CEO or the company's future growth prospects.  Much is being hidden in the morass of financial machinations surrounding acquisitions, divestitures, debt assumption and stock buybacks.  Meanwhile, revenues are declining, and investments in R&D are falling.  This cannot bode well for the company's long-term investor prospects, regardless of the well scripted talking points offered last week.

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