Seniors, graduates, prom-goers, parents -- we've got some advice for you. While you may have a lifetime of saving and investing ahead of you (we hope), don't discount the things you can do right now to save a buck. Our Fool Savers of the Month Award goes to Spencer Stacey and Samantha Braziller of Lee, Maine, who outfitted for their senior prom with duds made entirely of duct tape. His threads: a three-piece tuxedo, including tails and a top hat. Hers: a long, sequinlike, white gown. Total cost: 12 rolls of duct tape, 20 hours of creative work, and $75. Very Foolish!
Sadly, The Motley Fool 50 never had a date for the prom. If you would like to date a leading market index of 50 world-beating companies, call 703-555-9111. You won't be disappointed. Today, the index fell about 2%.
In today's Motley Fool Take:
CEO Quits, Tyco Tanks
The ongoing Tyco (NYSE: TYC) soap opera took another strange twist today, with chairman and CEO Dennis Kozlowski resigning just days after saying he wouldn't. What presumably spurred him to action was a New York Times report this morning that he was the subject of a criminal investigation for dodging New York State sales taxes.
Kozlowski had built Tyco into a $120 billion conglomerate in his 10 years at the top, and its share price was near $60 in early January. But rumors of an SEC investigation into accounting matters, management's waffling over whether to split the company into four parts, and its mishandling of financial services unit CIT all shattered investor confidence. The stock nosedived, and with today's 25% haircut it now sits below $17.
Former CEO John Fort will take over the reins on an interim basis, and the board of directors reaffirmed its commitment to shed CIT through an IPO.
Value investors may be taking note of Tyco now with a P/E under 20 and a price-to-sales ratio approaching one, but this is a leaderless company that doesn't know what to do with itself -- and there may still be more negative surprises hiding in the shadows.
"Investing without research is like playing stud poker and never looking at the cards." -- Peter Lynch
Sometimes you make the market and other times the market makes you. Shareholders of Knight Trading (Nasdaq: NITE) probably spat out their collective coffee this morning when they saw their stock slashed by more than half in pre-market trading. There was no news on the wire so speculation ran as rampant as the pulled hair and teardrops. Was the SEC sending in the hounds? Was the company's auditor dragging the lake? Was Dennis Kozlowski moving in?
Buying into the country's leading market maker at a time of hot and cold trading activity was obviously not done without accepting a great deal of risk. The decimalization of the market had left Knight without the juicier bid-ask spread feasts of the past, but why the famine?
Well, as it turns out, it was little more than a trading software bug in Knight's own system. The glitch floored the market with sell limit orders for Knight's stock exclusively, slamming the shares in pre-market Instinet trading.
The company halted trading in its own stock, and rightfully so, to address the problems. The situation righted itself later in the day after the Nasdaq said it would cancel all the accidental trades. So, in the end, all is right with Knight after all.
Whether you find this amusingly ironic or downright troubling, you're certainly entitled to your own opinion. We are all human. We are all different. We all make mistakes. Apparently, computers do, too.
Discussion Board of the Day: Discount Brokers
Many of the country's leading discount brokers rely on Knight Trading. Quite a few actually own stakes in the company, too. How are you doing with your broker? Looking for a change? Want to see what your fellow Fools think of your different brokering options? All this and more -- in the Discount Brokers Discussion Board. Only on Fool.com.
What YOU Will Get From Social Security
Despite the light aroma of gangrene that seems to surround Social Security, you'll probably get something in return for all the taxes you've paid into the program. How much? That depends on many factors. The good news is that you can get an estimate right now from the Social Security Administration (SSA) itself. There are two main ways to get a projection of your benefits: via a statement sent to you by the SSA, or by using an online calculator.
If you are a working American who is at least 25 years old, then you will receive an official Social Security statement three months before your birthday. (You may disagree with a lot of what the SSA does, but do you send something to all of your friends and relatives three months before their birthdays?) Your statement will contain all kinds of useful information, including an estimate of how much you might receive if you retire at different ages, how much you might receive if you become disabled, and how much your spouse and kids might receive if you join that great tax shelter in the sky.
It's important to recognize that Social Security will not replace your entire income in the event of your retirement, disability, or death. The Social Security retirement benefit currently replaces approximately 40% of the average salary. The average survivor benefit for a widow with two kids is just $21,000 a year. So make sure you have enough retirement savings, disability insurance, and life insurance beyond what Social Security will provide.
If you'd like to see your most current projections but don't want to wait until your next statement is sent to you (you probably tear small holes in the presents under the Christmas tree, too), call 1-800-772-1213.
The statements sent to you by the SSA will contain the most accurate projections of your benefits since they are based on your actual earnings history according to IRS records. However, if you'd like an estimate right now, visit the SSA's online calculators. Keep in mind, though, that all projections are not the actual amount you'll receive, since laws and your income will change. But the numbers are good enough to use for your retirement and insurance planning, as well as to satisfy your curiosity.
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Don't miss Dave and Tom Gardner when they talk to Katie and her Today Show cohorts about the Fool's latest book, What to Do With Your Money Now, on Thursday, June 6. We guarantee it'll be even more fun than Ricky Martin singing la vida loca on the Plaza!
El Paso Corp. (NYSE: EP) saw its shares plunge 13% on news that treasurer Charles Rice died from an apparent self-inflicted gunshot wound. El Paso is among the companies under investigation for bogus "round-trip" energy trades, but it's not known if Rice's death is related to the company's problems.
General Motors (NYSE: GM) brought a bit of optimism to the market this afternoon by raising its second-quarter and full-year earnings targets. At the same time, the world's number-one automaker expressed disappointment with May sales.
According to a Reuters report, "U.S. manufacturing activity expanded at its fastest pace in more than two years in May." This is the fourth month in a row to feature growth, serving as evidence for those who see the U.S. economy recovering.
USA Interactive (Nasdaq: USAI) has made an unsolicited $4.5 billion bid for the portions of its publicly traded subsidiaries -- Expedia (Nasdaq: EXPE), Ticketmaster (Nasdaq: TMCS) and Hotels.com (Nasdaq: ROOM) -- that it doesn't already own. The bid represents a 7.5% premium over the companies' recent stock prices.
How the mighty have fallen. According to an Associated Press story, the Netscape Internet browser, owned by AOL Time Warner (NYSE: AOL), sports a market share of just 4%, compared to around 90% for Microsoft's (Nasdaq: MSFT) Explorer
As Enron Turns: In bankruptcy court, Enron creditors are tryingto hold Arthur Andersen's 1,700 partners personally liable for much of Enron's debts. Read more in this Wall Street Journal story (subscription required, free trial available to Fools).
Microsoft (Nasdaq: MSFT) has settled an SEC investigation of its accounting practices. In slightly related news, The New York Times reported on companies banding together to fight Mr. Softy.
And Finally...
Today on Fool.com: Rick Munarriz gives advice to grads that goes beyond wearing sunscreen and sharing stock screens.... In the Foolish 8, should you have more faith in the small, focused player than the over-diversified conglomerate?... In Fool's School, how much are you really spending on food and housing?
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Bob Bobala, Robert Brokamp, Jeff Fischer, Tom Jacobs, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Reggie Santiago, Dayana Yochim
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