It's a sign of the times: America's wealthiest are not as wealthy as they used to be, given the decline of the stock market. But that didn't stop Fortune magazine from publishing its Top 40 Richest Americans Under 40 list. Special for this year, they broke down the list by astrological sign to prove that Capricorns and Scorpios are the dominant money winners in our society. Virgos apparently have no business sense, since not a single one made the list.

Normally we'd say there's no point in trying to predict the market as a whole, but maybe there's something to be said for this astrology business. The Motley Fool 50 lost about 2% on the week. Fears that it's a Virgo are yet unfounded.

In today's Motley Fool Take:

Intel's Still No Gazelle

Clearly, investors were expecting worse. After weathering a closing bell that saw its lowest stock price in six years, tech bellwether Intel(Nasdaq: INTC) issued a mid-quarter update yesterday that was largely in line with previous guidance. As a result, shares were up about 8% today.

Industry watchers were fearful the company would follow in the footsteps of another chip maker, National Semiconductor(NYSE: NSM), which indicated sales would likely decline over the next few months. But Intel said third-quarter revenue would come in just below the midpoint of its previous $6.3 billion to $6.9 billion range, and although unit sales are "trending toward the lower end of the normal seasonal pattern," all other guidance remains the same. In short, no bad news.

So, the chip sector appears to be hanging on. "Hanging on," however, doesn't exactly inspire great confidence. We've already questioned just how long it will take to see a recovery in the economy in general, and the PC market in particular. Intel's fortunes are bound and shackled to these dynamics, and there are enough other issues surrounding the company that investors need to adopt a cautious outlook.

Discussion Board of the Day

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Yo Quiero Starbucks?

Packing up and traveling south, Starbucks(Nasdaq: SBUX) entered Latin America yesterday with the opening of its first store in Mexico City. The coffee king plans to open a Puerto Rico location within the next week, and is investigating its opportunities in Argentina, Brazil, Colombia, Peru, and Venezuela. Chalk it up as another move toward making sure coffee drinkers can grab a Venti Latte (non-fat, please) the world over.

As with its other international ventures, Starbucks partnered with a local company in Mexico for its expansion there. Having local partners for its international ventures has been crucial to the company's success in diverse markets. Taking the Starbucks brand and plopping it down hither and thither likely wouldn't fly, but adapting it ever so subtly, with the help on folks on the ground, has proven key.

Mexico will be an interesting market for Starbucks, because while the country is the world's fifth-largest coffee producer, its people don't actually drink a whole lot of the stuff. They chug down lots of cola instead.

Never one to back down from a challenge, Starbucks' Howard Schultz said, "The reason coffee consumption is not as strong in this country as others is that people have not been given the kind of coffee experience they deserve. We can give them that."

As press-release perfect as that sounds, there's no reason to doubt Starbucks can create a café latte culture in Mexico. Naysayers believed the company would never succeed in tea-loving China, but it has. Critics shook their heads when the coffee giant targeted Europe, with its history of tiny espresso cafes, but the company has seen success there. Starbucks in places like Kuwait, Lebanon, and Saudi Arabia are popular and growing.

The company already plans to add another 10 to 15 Mexican locations over the next 12 to 18 months, and sees an eventual 100 Mexican Starbucks within three to five years. At that rate, it won't be long before the rest of Latin American is blanketed in the company's trademark green and white.

Quote of Note

"When I am abroad, I always make it a rule never to criticize or attack the government of my own country. I make up for lost time when I come home." -- Sir Winston Churchill (1874-1965)

Dow 5000?

The bond market is considered by many to be more rational than the stock market. Thus, when it comes to market and economic commentary, it makes sense to listen to what bond guys have to say.

There's no bond market participant more widely respected than PIMCO bond fund manager Bill Gross. In his September Investment Outlook, posted today, Gross comments negatively on the stock market, arguing market returns are likely to be poor until valuations return to more reasonable levels.

Whether or not you agree with Gross's conclusions, you've got to love his tell-it-like-it-is style. There's no fence-riding for this guy. Right up front, he says: "My message is as follows: Stocks stink and will continue to do so until they're priced appropriately, probably somewhere around Dow 5,000, S&P 650, or Nasdaq God knows where."

Gross makes a compelling case for why the bear market hasn't run its course. Even without a worsening economy, Gross sees stock prices at too high a level to offer reasonable returns.

He bases his conclusions on a careful study of investment returns over the past 100 years. Over that time, the U.S. stock market delivered an average real annual return (i.e., after inflation) of 6.7%. Many have said the stock market's long-term growth is based primarily on earnings growth -- but Gross finds this to be untrue.

In breaking down the 6.7% annual equity return, Gross says the single largest determinant was the initial dividend yield of 4.2%. The second factor behind the rise in stocks was a tripling average P/E ratio, which contributed two percentage points of the 6.7% overall return. Coming in a distant third was earnings growth, which averaged a paltry 0.6% real annual growth over the 100 years. The conclusion? Stocks do not follow earnings growth, as Peter Lynch says on his commercials. Rather, dividend yields matter most to stock returns.

The implications are severe. Gross concludes:

[M]ost large market indices (NYSE, Wilshire 5000) yield somewhere in the area of 1.7%. Whoa now, did I say 1.7%? Yes-siree. And despite the claims for higher implied yields due to stock buybacks (mostly fallacious), even if we grant an 'implied' yield of 2.0% to the market, it's hard to see how we can get to our 6.7% real return target.

What's a Fool to do? It's not necessary to exit stocks entirely -- just the highly valued ones. Now's the time to critically examine your portfolio and make sure you're positioned in undervalued stocks -- those with valuation metrics far less than the S&P 500's average P/E of 21.5. If you don't know how to find such stocks, we offer The Motley Fool Select and Motley Fool Stock Advisor, two monthly services to help you identify great companies with undervalued shares.

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Navy Sends General Dynamics a Bill

When is a bill for more than a billion dollars not really a problem? Well, when you're General Dynamics(NYSE: GD), one of the largest, and perhaps the best capitalized of all defense contractors, it's a nuisance.

General Dynamics and Boeing(NYSE: BA) said Tuesday that the Navy is demanding payment of $2.3 billion within 30 days, or the outstanding amount would be turned over to the Pentagon's collections agency. (As an aside, can you imagine how tough these collections people must be? So much so that the Pentagon turns to them to pressure debtors!) The bill, which amounts to about $1.3 billion from General Dynamics and another $1 billion from Boeing, would not be a big burden on either company -- they both have that kind of cash from the cancellation of the A-12 attack jet that never saw production.

General Dynamics called the letter "unseemly" and said it interferes with other current negotiations surrounding the payment. General Dynamics is attempting to reduce the payment through legal challenges, and offering in kind services in exchange for extinguishing the debt. General Dynamics has a case before the U.S. Appellate Courts that disputes the Navy's stance that the cancellation of the A-12 represents a default by the contractors.

Regardless of the outcome, it's important for shareholders to view this in its proper perspective. Even if the worst outcome is realized, the hit to cash flow for a company of General Dynamics' size will likely be less than 10%. Moreover, General Dynamics remains at such attractive multiples to cash flow, and this issue has been known for long enough, that such tactics in the duration of the negotiation should be viewed as pro forma.

Quick Takes

Congressional investigators have "reached the end of the road" with Martha Stewart. A spokesman for Rep. Billy Tauzin (R-La.) says they've given up trying to get her to cooperate and may soon refer her to the Justice Dept. for possible criminal investigation. The media maven and head of Martha Stewart Living Omnimedia(NYSE: MSO) is under suspicion of selling shares of ImClone Systems(Nasdaq: IMCL) on insider knowledge.

CryoLife (NYSE: CRY) shareholders smiled today. The company, which freezes human tissue for later transplantation, says the Food and Drug Administration has allowed it to resume shipping of cardiac and vascular tissue. The FDA ordered a recall last month over contamination concerns. The stock more than doubled on the news.

R.J. Reynolds (NYSE: RJR) dropped 10% after an earnings warning. The nation's second-largest tobacco company says it has had to increase promotional spending to keep up with No. 1 Philip Morris(NYSE: MO), and third-quarter and full-year earnings will suffer as a result.

Bankrupt U.S. Airways has grounded its policy of not allowing passengers with non-refundable tickets to fly standby. It will, however, charge $100 for that privilege. Under fierce criticism, the airline also says it will reverse policy and allow frequent flyer mileage from low-fare passengers to accrue toward "Dividend Miles" tier status.

And Finally...

Today on Will the lights go out in the Citi?... Internet killed the radio star.... We explain stocks, in Fool's School.... And buying a home? Save on taxes.

Bob Bobala, Robert Brokamp, Tom Jacobs, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Jackie Ross, Reggie Santiago, Dayana Yochim